You have an employee who is shared by more than one company. The employee works less than 40 hours in a given week at each company, but when you add the the time cards together, she worked more than 40 hours in that week. Is the employee due overtime pay?
It depends on whether a “joint employment” relationship exists between the companies.
“Joint employment” describes the situation in which an employee works for more than one employer, but the employers have enough in common to be considered “one” under state and federal wage and hour laws. And if the employers meet this threshold and an employee works for both of them in a workweek, all of the hours must be counted to determine whether overtime is owed.
Whether a particular arrangement translates into “joint employment” is based upon all the circumstances in that individual case. The courts have used the following factors to make this determination:
- whether the employers share an employee’s services;
- whether the employer acts directly or indirectly in the interest of the other employer; and
- whether the employers are not disassociated with respect to an employee and share control of the employee; for example, where one employer controls, is controlled by, or is under common control with the other employer.
For instance, common ownership would support the control necessary to establish joint employment.
This does not mean that the employee will get paid overtime twice, but simply there is a shared obligation to compensate the employee for overtime hours paid.
Source: BOLI