Joint Versus Separate Employers Under Federal Overtime Law

Recent news reports indicate that local fire departments are under investigation by the United States Department of Labor, possibly for overtime violations related to the joint employer rule under overtime law.  Under federal law, someone can be an employee of separate and distinct employers; each of those employers can count the employee’s hours separately for purposes of determining whether the 40-hours per week threshold has been exceeded.  So you can work your regular full-time day job, and then pick up some extra hours at night working part-time somewhere else for a different employer, without your full-time employer having to count those part-time hours as overtime work.  That’s assuming the two are separate and distinct employers.

A problem occurs when those two employers aren’t separate and distinct, but are instead considered “joint employers.”  In that instance, all the hours worked for the joint employers are combined to determine whether the employee has exceeded forty total working hours in a given week for the joint employers.  If so, then the joint employers owe the joint employee overtime.

This may be what’s happening with the local fire departments.  Municipalities sometimes enter into agreements with each other to share resources, such as fire and rescue.  If that makes the fire departments “joint employers,” then all hours worked for both municipalities are combined for overtime purposes, rather than dividing working time between the two.  It seems that full-time firefighters for one city are working part-time, on-call hours for a different city under one of those sharing agreements.  The question is whether those working hours have to be combined, thus exposing both cities to potential overtime responsibility.

Determining whether two employers are a joint employer can be difficult.  The Department of Labor considers all of the facts in a particular case.  If the facts establish that two or more employers are acting entirely independently of each other and are completely disassociated with respect to the employment of a particular employee, they’ll be considered separate and distinct employers and the employee’s working hours will not be combined.  But if the facts establish that employment by one employer is not completely disassociated from employment by the other employer, then there may be joint employment and all of the employee’s working hours must be combined for overtime purposes.

The courts have devised an “economic realities” test to determine whether two employers are separate and distinct or instead joint.  Courts look at numerous factors in deciding whether joint employment exists, including whether the alleged joint employer had the power to hire and fire the employees, supervised and controlled employee work schedules or conditions of employment, determined the rate and method of payment, and maintained employment records.  The economic realities test is a fluid concept; different courts apply different standards and some standards apply to certain situations but not others.  But the above factors are the main ones.

Overtime cases require legal analysis of federal statutes, U.S. Department of Labor regulations, and court decisions.  I can help you with any employment law or labor law questions that you might have.  Please feel free to contact me for a free initial consultation about employment law or labor law.

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