Recruit
Joint employment and how is it different from co-employment
Joint employment is when two or more employers share supervision and control of an employee, and they are all jointly responsible for the terms of employment.
Joint employment differs from co-employment, which usually involves a third party, such as a professional employer organization (PEO), which shares employer responsibilities with the client company, most often for administrative purposes like payroll and benefits, without direct control over the work environment.
Note that in many cases, companies do not choose to be joint employers but are instead deemed to be joint employers under labor law, such as the National Labor Relations Act.
What criteria are used to determine if a joint employment relationship exists?
- Employee control: It’s likely joint employment if both entities can direct, hire, fire, or modify the employment conditions.
- Shared supervision: It’s likely joint employment if both entities supervise the day-to-day work of the employee.
- Shared administrative functions: In joint employment, the two entities typically share the handling of administrative functions such as payroll, hiring practices, and labor relations.
What are the pros and cons of joint employment?
- Pros
Resource sharing
Joint employment allows businesses to share employee costs and resources, reducing the organization’s overall operational costs.
Flexibility
A joint employment arrangement provides flexibility in managing the workforce and can help meet fluctuating labor demands.
- Cons
Complex compliance
Complying with labor laws may be more complex in joint employment, potentially leading to legal challenges.
Shared liability
Both employers are liable for employment law violations, which can increase risk exposure.
Potential for disputes
Joint employment can sometimes lead to disputes between employers regarding responsibilities and obligations.
What legal considerations should be taken into account in a joint employment arrangement?
Joint employers are each responsible for complying with labor laws, work regulations, and anti-discrimination laws. Legal documents and contracts also should be created that clearly outline each employer’s responsibilities, such as employment conditions, benefits, etc. The joint employers also need to work together when handling claims related to workplace injuries, wages, and discrimination.
How can companies manage the risks associated with joint employment?
- Clear contracts: Clear agreements should be drafted outlining the division of human resources (HR) responsibilities, supervision, and compliance obligations between the joint employers.
- Communication: Regular communication between joint employers is crucial to coordinate policies and address any employment issues effectively.
- Monitoring: Joint employers should regularly audit and monitor employment practices to ensure compliance and mitigate risks.
Andrew (Drew) joined the Remote People team in 2020 and is currently Director, Regulatory Affairs. For the past 13 years, he has been a trusted advisor to C-Suite executives and government ministers on international compliance and regulatory issues. Drew holds a law degree from the University of Otago, a PhD from the University of Sydney, and is an enrolled Barrister and Solicitor of the High Court of New Zealand.
