Joint Employer vs Co Employer

They sound similar, but are very different

The concepts of joint employer and co-employer relate to employment relationships but have distinct meanings.  However, there have been some recent important employment rulings that contractors need to be aware of to protect their employer status.

Joint Employer: In a joint employer relationship, two or more entities share control and responsibility over an employee. This means that both employers have the authority to make decisions about the terms and conditions of employment. If one entity has the ability to hire, fire, supervise, or otherwise control the employee, it may be considered a joint employer along with another entity.

Co-Employer: A co-employer relationship typically occurs in the context of a professional employer organization (PEO) or an employer of record. In this arrangement, one entity (the PEO or employer of record) takes on certain employer responsibilities such as payroll, benefits, and HR administration for employees, while the other entity (the client company) retains control over the day-to-day tasks and supervision of the employees.

The National Labor Relations Board recently took a position and made a ruling that will impact general contractors.  Here are some things general contractors should know and how to protect themselves from potential joint employer status and the liability that comes with that status.  This ruling is scheduled to be in effect March 11, 2024.

“Should general contractors find themselves deemed a joint employer of a subcontractors’ employee, they could face potential litigation or other consequences for workplace violations sustained by workers.”

“The new standard would rescind a 2020, Trump-era rule, which made it easier for “actual joint employers to avoid a finding of joint-employer status” due to a higher threshold on terms of employment, according to the NLRB”

General contractors should consider addressing these changes in their contracts to ensure they maintain their status. 

The new conditions of employment

“The NLRB’s new standard for joint employment considers seven factors to determine whether a worker is an employee of a company, only one of which needs to be true. They are whether the company in question is responsible for:

• Wages, benefits and other compensation.
• Hours of work and scheduling.
• The assignment of work.
• The supervision of work.
• Work rules and directions on the manner and methods of work and the grounds for discipline.
• The hiring and discharging of workers.
• Working conditions related to safety and health.”

One of the noted possible drawbacks is “it could disincentivize contractors and superintendents from acting to help protect the health and safety of a worker employed by a sub. “

Source constructiondrive.com. Click here to read the full article.