UNDERSTANDING THE JOINT EMPLOYER DEFINITION: What franchises need to know about a key policy.

Author:Bisio, Rick

It feels as though every few years, panic concerning joint employment and the future of franchising rears its ugly head.

Much of the alarm born from news about joint employment stems from a lack of understanding of the issue. This is particularly true regarding what a joint employer is and is not. Educating franchisors and franchisees on what it means to be a joint employer, and how it will or won't affect them, is the best way to prevent the spread of misinformation and assuage any potential fears. So, what is a joint employer, and why doesn't that include your franchise?

What is a Joint Employer?

First, it's important to understand what constitutes a joint employer. A joint employer is any business that shares the control of an employee's supervision with another business. One such example would be the sharing of contract employees between a staffing agency and its client.

Specifically, there are two different kinds of joint employment. They are defined as vertical joint employment and horizontal joint employment. Each of these are defined by distinctly different criteria that have different ramifications regarding the employer and employee relationship.

Vertical Joint Employment

Vertical joint employment is when one company provides employees to another company. The key measure regarding vertical joint employment is that the employee in question financially relies on both companies. This is the case with the relationship between staffing agencies and their clients.

Horizontal Joint Employment

Horizontal joint employment is a bit different. In horizontal employment, an employee works directly for two separate businesses that are still connected in some way. An example of this might be a server who works at two separate restaurants within a larger restaurant group. Horizontal joint employment may mean that all the hours worked at either location are defined as the same pool of hours regarding overtime.

The definition of what constitutes a joint employer relationship is constantly changing or threatening to change. That's why it's important for employers to stay vigilant in reviewing their employee relationships and ensuring that they know what does and does not constitute joint employment. Because of this, it's no surprise that many franchisors are keeping a close eye on the latest developments regarding redefining what it means to be a joint employer.

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