Definition · Employment law and regulation
Joint Employer
Definition
Joint employer means one of two or more businesses that are each legally treated as the employer of the same workers. Joint employers can each be liable for wage and hour violations, discrimination, safety and labor law duties. It comes up most with staffing agencies and their clients, franchisors, and related companies sharing staff.
Also called: Joint employment, Joint employer rule, Joint employer liability
How joint employment arises
Joint employment is a legal conclusion, not a contract term. Two businesses can sign an agreement saying the agency is the sole employer, and a court or agency can still decide that both are employers based on how the work actually happens.
There are two common patterns:
- Vertical joint employment. A worker is employed by one company (such as a staffing agency) but works for the benefit of another (the client), which also controls the work. This is the typical staffing case.
- Horizontal joint employment. A worker is employed by two related businesses, such as two restaurants with shared ownership, and works hours at both.
For how this relates to the contractual sharing of employer duties used by PEOs and staffing firms, see co-employment.
The tests differ by law
There is no single test. Each statute has its own, and they have changed over time.
[FLSA](/glossary/flsa/) (wages and overtime). Courts apply an economic realities test. Factors commonly considered include whether the putative employer has the power to hire and fire, supervises and controls schedules or conditions of employment, determines the rate and method of pay, and maintains employment records. The Department of Labor issued a narrower rule in 2020, a court vacated most of it, and the DOL rescinded it in 2021, so courts rely on their own circuit's case law.
NLRA (labor law). The NLRB issued a 2023 rule that would have counted reserved and indirect control, but a federal court vacated it in 2024 before it took effect. The 2020 rule, which requires substantial direct and immediate control over essential terms such as wages, hours, hiring, discipline and supervision, remains in place.
Title VII and other anti-discrimination laws. Courts and the EEOC look mainly at the right to control the means and manner of the work, under common-law agency principles.
Because the tests and the agencies' positions shift with administrations and court decisions, check the current standard before relying on any one of them.
What joint employer status means in practice
Overtime is aggregated. If two joint employers each use a worker for 25 hours in the same workweek, the worker has 50 hours and is owed 10 hours of overtime. Both employers can be liable for it. This catches related businesses that share hourly staff across locations.
Liability is shared. A staffing client found to be a joint employer can be named in a wage claim, a harassment claim or a discrimination charge brought by a temp. The client's managers are usually the ones whose conduct is at issue.
Labor law duties. A joint employer under the NLRA may have to bargain with a union over the terms it controls, and can be liable for unfair labor practices.
Safety. Under OSHA, host employers and staffing agencies share responsibility for temporary workers regardless of the formal joint employer label.
A staffing example
A regional bank's operations center uses a staffing agency to supply 60 temporary data entry clerks. The agency recruits, pays and handles benefits. The bank's supervisors set the clerks' schedules, approve their timecards, assign daily work, and can ask the agency to remove a clerk at any time.
The bank is very likely a joint employer for FLSA and anti-discrimination purposes, because it controls schedules and supervises the work daily. If the agency underpays overtime, the bank can be pulled into the claim. That is normal for temporary staffing and usually acceptable, as long as the bank manages it rather than ignoring it.
How staffing clients manage the risk
- Contract carefully. Require the agency to comply with wage, tax and benefits laws, carry appropriate insurance and indemnify the client. Indemnity does not remove liability, but it moves the cost.
- Audit the agency. Ask for evidence of correct overtime pay, I-9 compliance and workers' compensation coverage.
- Route employment decisions through the agency. Client supervisors direct the work; the agency hires, sets pay, disciplines and ends assignments. A client can ask for a worker to be removed from its site, but should give the request to the agency.
- Train client supervisors. Temps are covered by the client's anti-harassment expectations, and complaints must go to both HR teams.
- Track hours across entities. Related companies that share hourly workers need combined timekeeping for overtime.
This page is informational, not legal advice; state laws, such as those in California, can add their own joint liability rules for labor contractors.
Frequently asked questions
What is a joint employer?
One of two or more businesses that are each legally treated as the employer of the same worker, so each can be responsible for wage, discrimination, safety and labor law obligations to that worker.
What is the joint employer rule?
Usually it refers to a regulation from the Department of Labor or the NLRB that defines when a business is a joint employer under the FLSA or the NLRA. Both agencies have issued and withdrawn rules in recent years, so the current standard depends on the law and the date.
Is a staffing agency client a joint employer?
Often, yes, for wage and discrimination purposes, when the client supervises the work and controls schedules. The more control the client has over hiring, firing, pay and conditions, the more likely joint employment is.
What is the difference between joint employment and co-employment?
Co-employment usually describes a contractual arrangement in which two businesses share employer duties, as with a PEO. Joint employment is a legal finding that both businesses are employers and can both be liable.