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Families First Coronavirus Response Act’s Application to Joint or Integrated Employers

Introduction

On March 18, 2020, President Donald Trump signed into law the Families First Coronavirus Response Act (“FFCRA”), which took effect on April 1, 2020, and will remain in effect through December 31, 2020. Among other things, the FFCRA seeks to assist both employees and employers affected by COVID-19.

The FFCRA includes, among other provisions, the Emergency Paid Sick Leave Act (“EPSLA”) and the Emergency Family and Medical Leave Expansion Act (“EFMLEA”). Under both the EPSLA and EFMLEA, a covered employer is one that employs no more than five hundred (500) employees. Calculating the total number of employees can be much more complicated than a quick head count. Among other complications, employers that are joint or integrated employers are required to combine their employees when calculating the total number they employ. Pursuant to the FFCRA, there are two separate tests for making this determination: the joint employer test under the Fair Labor Standards Act (“FLSA”) and the integrated employer test under the Family and Medical Leave Act (“FMLA”).

The Joint Employer Test Under the Fair Labor Standards Act

Per the guidance issued by the Department of Labor (“DOL”), Wage and Hour Division (“WHD”), “joint employer” status is to be determined using the test articulated under the FLSA. Under the FLSA regulations, there are two joint employer scenarios: (i) where an employer suffers, permits, or otherwise employs an employee to perform work, but another person simultaneously benefits from that work; and (ii) where an employer employs an individual for set hours in a workweek and another employer employs that same individual for another set of hours in the same workweek and the employers are joint employers.

Under the first scenario, the other individual and/or entity benefiting from the work performed by the employee is a “joint employer” only if they are acting directly or indirectly in the interest of the employer in relation to the employee. The relevant factors for determining this are whether the other individual and/or entity (i) hires or fires the employee; (ii) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (iii) determines the employee’s rate and method of pay; and/or (iv) maintains the employee’s employment records. To be considered a “joint employer,” the other individual and/or entity cannot merely have the right to exercise one or more of these factors, but must actually exercise that right. Ultimately, a “joint employer” determination depends on how all the facts in a specific case relate to these factors and the weight that would be given to each factor in that specific case.

However, under the second scenario, to be considered a “joint employer,” the employers must be sufficiently associated with respect to the employee’s employment. Generally, employers are “sufficiently associated” if (i) there is an arrangement between them to share an employee’s services; (ii) one employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or (iii) they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer, depending upon all of the facts and circumstances.

In addition to the foregoing regulations, the Eleventh Circuit has articulated an eight-factor test for determining “joint employer” status. The factors are: (i) the nature and degree or control of the workers; (ii) the degree of supervision, direct or indirect, of the work; (iii) the power to determine the pay rates or the methods of payment of the workers; (iv) the right, directly or indirectly, to hire, fire, or modify the employment conditions of the workers; (v) preparation of payroll and the payment of wages; (vi) ownership of facilities where work occurred; (vii) performance of a specialty job integral to the business; and (viii) investment in equipment and facilities. Again, no single factor is determinative, but the analysis is dependent upon the “economic reality of the circumstances” as “indicators of economic dependence.”

The Integrated Employer Test Under the Family and Medical Leave Act

Per the guidance issued by the WHD, “integrated employer” status is to be determined using the test articulated under the FMLA. Under the FMLA regulations, if the test is met, separate entities will be parts of a single employer and must count their employees together. The entire relationship is to be viewed in its totality, in addition to considering the following factors: (i) common management; (ii) interrelation between operations; (iii) centralized control of labor relations; and (iv) degree of common ownership/financial control.

If you feel your rights under the Families First Coronavirus Response Act have been violated, or if you have any questions regarding your employment rights, please contact the experienced Birmingham employment law attorneys at Wrady Michel & King. You can contact us online or by calling us at (205) 319-9724.