Ninth Circuit Court Applies Joint Employer Analysis and Finds Employee’s Total Hours Worked for Two Employers Count Toward Weekly Overtime Pay Computations

Volume 2, Issue 16
October 15, 2003

The U.S. Court of Appeals for the Ninth Circuit found that two independently owned and operated health care facilities were "joint employers" of both companies' employees. One of the health care facilities, A-One Medical Services, Inc. was interested in acquiring the other, Alternative Rehabilitation Home Healthcare, Inc. A-One was assisting Alternative in obtaining certain government certifications prior to the acquisition. In that regard, A-One oversaw some of the work being performed for Alternative's clients, utilized the same nursing supervisors and scheduler to manage employees of both companies at various times, shared a common administrative office, and oversaw the processing of Alternative's government required paperwork. Based on these facts, the court found that A-One and Alternative were joint employers that must aggregate the work done by their employees for both companies when computing and paying overtime.

Citing federal wage and hour regulations, the court explained that if an individual works for more than one company at a time, an analysis must be undertaken to determine if the individual's employers should be treated separately or jointly for purposes of determining the employers' responsibilities under the Fair Labor Standards Act ("FLSA"), including overtime payments. If the pertinent facts indicate that two or more employers are acting entirely independent of each other and are completely disassociated with respect to the employment of a particular employee, who performs work for the two or more employers during the same workweek, each employer can disregard the work performed by the employee for the other employer(s) in determining his own responsibilities under the FLSA.

However, if the facts establish that an employee is employed jointly by two or more employers, all of the employee's work for all of the joint employers during the workweek is considered as one employment for purposes of the Act. In such a situation, all joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the FLSA, including the overtime provisions, with respect to the entire employment for the particular workweek. Thus, if an employee works 40 hours per week for each joint employer, the employee is considered to have worked 80 hours per week for a single employer (comprised of the joint employers) and is owed overtime, which can be collected from one or both joint employers. See 29 C.F.R. § 791.2(a).

Joint employer relationships are frequently found when employees work for "sister" companies owned by a common "parent" corporation. Such employment relationships generally will be considered to exist in situations such as: (1) where there is an arrangement between the employers to share the employee's services, as, for example, to interchange employees; (2) where one employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or (3) where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer. See 29 C.F.R. § 791.2(b).

This case illustrates the need to examine your company's obligations under the FLSA to employees that perform work for closely related companies during the same work week(s).

Chao v. A-One Med. Servs., Inc., No. 02-35158 (9th Cir. Oct. 6, 2003).

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.