In today's economy, you may have two possible "employers" — if you're a temp or outsourced employee, for instance, or if you're working for a consultancy or onsite contractor. When you face discrimination or harassment on the job, who's legally responsible? The good news: Even if both companies deny liability, a court probably won't let them both off. Possibly both are liable as joint employers.
This article by
TELG managing principal R. Scott Oswald and TELG associate Tejal Garg was published by The Employment Law Group, P.C. on November 9, 2022.
Who Do You Sue If You Have Joint Employers?
By R. Scott Oswald and Tejal Garg
IMPORTANT: The following article is intended as a general summary of facts and law and not as individual legal advice upon which you should rely or act. Every case is unique and specific. This article represents our firm’s best knowledge as of November 2022.
Let’s say you’ve faced discrimination, sexual harassment, or some other wrongdoing at work, and you want to hold your employer responsible.
Who is your employer, legally speaking? Who do you sue?
For some employees, there’s a simple answer: Just look at the company’s name on the door.
But for an increasing number of people in today’s economy, it’s not so easy. More than one corporation may seem like your employer — and each of them may try to deny legal responsibility for your mistreatment.
Here are just a few scenarios:
- You’re a temp who was sent to a company’s office by an agency
- You’re working on a multi-year project at a company’s HQ, but you were brought on board by a contractor or subcontractor
- You’re a consultant on a long-term assignment to one of your employer’s clients
- You work full-time for a company, but management recently decided to “outsource” your department, so you’re now paid by a third party
- You work for a national chain, but your location is owned by a franchisee
If you’re harassed in such a situation, which of your “employers” is legally liable? Is it the company whose name is on the door, the company whose name is on your paycheck, or some other entity?
Is it possible that no one is on the hook?
Some Basics of Employment Law
First, let’s acknowledge that not every worker has an “employer” under every law.
Some people work as independent contractors, for instance, meaning that they’re not protected by certain workplace laws. Other people work for companies so small that they don’t count as employers, depending on the statute. Still other employees work for the federal government, which is carved out in some legislation.
But if a corporation is telling you when, where, and how to work, you probably have at least one “employer” — and a bunch of legal protections.
Assuming that’s the case, and more than one company seems like it might qualify as your employer, who do you sue for workplace harm?
Here are some general rules:
- A company can’t just tell you that it’s not responsible for legal wrongdoing as your employer — or at least, not in a binding way. A court will always have the final word on that.
- Each of your potential “employers” may claim it’s not responsible, but if you can prove wrongdoing a court will generally hold at least one of them liable.
- The liability of your employer(s) may depend on the harm you’re claiming. If you’re being paid incorrectly, for example, the arrow may point toward the company that sets your pay rules. But if you’re being harassed, it may swing toward the employer of your harasser — or of a manager who ignored your complaints.
- Plus “joint employment” is a real thing under the law, which means that two (or more) employers can be held jointly liable for the same wrongdoing.
So how can you tell who’s legally responsible in a particular situation?
A good place to start is company policy. Consult your employee manual, or departmental guidelines, or even your employment contract. Does it tell you where to direct your specific complaint — a complaint of sexual harassment, for instance?
If so, that entity may be deemed your employer (or at least one of your employers) for this purpose.
Your query shouldn’t stop there, however.
Digging Deeper into Joint Employment
Unless you’ve been told otherwise, you still should complain internally to all of your possible employers — and if the matter proceeds to litigation, you should ask a lawyer whom to name in a lawsuit.
In general, a good attorney won’t omit any entity that could reasonably be deemed legally liable.
If you name more than one corporate defendant, you’re basically claiming that you have “joint” employers — in other words, that two or more companies share control over the terms and conditions of your employment. A court will then apply some legal rules to determine whether you’re right.
Tests for joint employment are fluid and highly dependent on the jurisdiction, the facts of your case, and the specific law in question. It’s a topic of ongoing debate within courts, states, and the federal government, including at the U.S. Department of Labor, the National Labor Relations Board, and the Equal Employment Opportunity Commission.
In most joint-employment tests, however, the following factors will be relevant — even if they’re phrased differently from test to test:
- The degree of control that each possible employer exercises over your actual work. This includes control over your daily routine, as well as control over hiring, evaluation, discipline, and firing. The more practical control a company has over your day-to-day job, the more likely it’ll be found to be your employer.
- The realities of your employment relationship. This factor looks at which possible employer sets the amount and terms of your pay/bonuses, dispenses or withholds your pay, and maintains your employment records. The more a company controls these basics, the more likely it’ll be found to be your employer.
- The duration and permanency of your employment. The longer and deeper your relationship is with a company, the more likely it’ll be found to be your employer.
- The alignment of your work with a company’s main business. The closer your duties are to a company’s core functions, the more likely it’ll be found to be your employer.
No Factor Is Decisive
In most versions of a joint-employment test, a court must judge the factors holistically — that is, by taking them all into account together. Certain factors may get more focus, but none is determinative. Any company that checks multiple boxes may be liable as your employer, especially where there’s a substantial connection to the harm you allege.
If only one entity meets this standard, you may have a sole employer. If more than one entity meets this standard, or if two entities combine to meet the standard, you probably have joint employers for this purpose.
It’s highly unlikely, meanwhile, that a court will say you have no employer with potential liability, assuming that there was wrongdoing and that you’re not an independent contractor or otherwise unprotected by law — and assuming that your lawyer sued all the right entities.
Modern corporate structures can be complex, but they’re never so complex that everyone can escape liability for a violation of employment law.
R. Scott Oswald is managing principal of The Employment Law Group, P.C., a law firm that represents employees in disputes with their employers. Tejal Garg is an associate at the firm.