3d people - men, person and a question mark. Businessman.
3d people – men, person and a question mark. Businessman.

On January 20, 2016, the United States Department of Labor issued an administrative interpretation concerning “joint employees” and the Fair Labor Standards Act.  The purpose of that interpretation is to discuss situations where employers attempt to avoid their obligations to pay overtime.  It can be found here:  Joint Employment

First, the Department of Labor discussed “horizontal” employment relationships.  Those relationships occur when an employee works for two (or more) separate, but related, companies.  For example, an employee may work for Joe’s House of Burgers for five hours, and then walk next door to Joe’s House of Chicken to work an additional five hours.  If  Joe owns and operates both companies, Joe might try to argue that his employee only accrues 25 hours per week at each business — thus avoiding overtime.  The Department of Labor’s interpretation will look more carefully at the relationship to see if Joe is actually employing individuals for 50 hours per week.

The Department of Labor also discussed “vertical” relationships.  This scenario involves situations where one company’s employee works in a location owned by a second company.  For example, the Department of Labor noted that employees of temporary staffing agencies may also be employees of the businesses where they are employed.  While the Department of labor noted many factors for resolving this issue, the key element will be control of the employee – an issue which I also discussed here:  How “Independent” Are Your Independent Contractors?

If you are looking for ways to avoid paying overtime, proceed cautiously and talk with your attorney.