Co-Employment in the United States: What’s Going On?

Co-Employment in the United States: What’s Going On?

Hey there! If you’re a business owner, manager, or even an employee, you might have heard about co-employment but aren’t quite sure what it’s all about. Don’t worry, you’re not alone. Co-employment is a bit of a complex topic, but I’m here to break it down for you in a way that’s easy to understand. So, let’s dive in!

What is Co-Employment?

First things first, what exactly is co-employment? Simply put, co-employment is when two or more employers share responsibilities for the same employee. This often happens when a company uses a staffing agency or a Professional Employer Organization (PEO). In this setup, both the company and the PEO or staffing agency have certain employer obligations.

Why Does Co-Employment Matter?

Co-employment can be a great way for businesses to handle HR tasks, especially for small and medium-sized businesses. By partnering with a company, one can offload some of the administrative burden, like payroll, benefits administration, and compliance with employment laws. This allows the business to focus on what it does best—whether that’s making great products or providing top-notch services.

The Legal Landscape of Co-Employment

Alright, now let’s talk about the legal side of things. The status of co-employment law in the United States is shaped by various federal and state regulations. Here are a few key points you should know:

- Fair Labor Standards Act (FLSA): Under the FLSA, both employers in a co-employment relationship are responsible for complying with minimum wage and overtime requirements. This means if there’s a violation, both can be held accountable.

- Family and Medical Leave Act (FMLA): Co-employment affects FMLA eligibility too. Employees must have worked a certain number of hours for the primary employer to be eligible for FMLA leave, but hours worked under the secondary employer also count.

- National Labor Relations Act (NLRA): The NLRA covers collective bargaining and union activities. In co-employment situations, both employers might be considered joint employers, impacting how labor relations are handled.

In 2023 the National Labor Relations Board (NLRB) issued a Statement on Joint Employer Status.

The NLRB made a significant update regarding joint employer status:

-New Definition: The NLRB’s 2023 statement broadens the definition of a joint employer. Now, an entity can be considered a joint employer if it has indirect control over essential employment terms and conditions. This is a shift from the previous, narrower definition, which required direct control.

- Impact: This change means more businesses might be classified as joint employers, increasing their responsibilities and potential liabilities. It’s crucial for companies using staffing agencies or PEOs to reassess their relationships and ensure compliance.

What Should Employers and Employees Do?

If you’re an employer, it’s crucial to understand your responsibilities in a co-employment setup. Here are a few tips:

- Choose Reputable Partners: If you’re using a staffing agency, make sure they’re reputable and compliant with employment laws.

- Clear Contracts: Ensure your contracts clearly outline the responsibilities of each party. This can help prevent misunderstandings and legal issues down the line.

- Stay Informed: Employment laws change, so stay updated on the latest developments to remain compliant.

The Bottom Line

Co-employment can be a valuable arrangement for many businesses and employees, but it comes with its own set of challenges and legal complexities. By staying informed and proactive, both employers and employees can navigate the co-employment landscape effectively.

So, whether you’re looking to partner with or using a staffing agency, or just curious about your rights, understanding the basics of co-employment law is a great place to start. Here’s to smoother business operations and happier workplaces!