There are three primary types of employer relationships. Below is an overview of the types of employer relationships and how each can impact the employee count for an employer, as well as the eligibility of leave offerings for employees and the application of policy.
Types of Employer Relationships
There are three main types of employer relationships:
- Joint Employers
- Integrated Employers
- Common Ownership
Joint Employers
To fall under the joint employer rule, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another business’ employees.
Furthermore, joint employers are jointly held responsible for each other’s employment practices (including fair and unfair labor practices), and/or have joint responsibility to collectively bargain with a union.
How Do I Know if I am a Joint Employer?
Below are the factors that help determine whether entities are joint employers:
- Hiring and firing authority;
- Supervising and controlling work schedules and conditions;
- Determining pay rates; and
- Maintaining employment records
FMLA Count for Joint Employers
When an employee is employed by two employers in a joint employer relationship, there is one employee that will be the primary employer and the other will be the secondary employer. To determine the primary and secondary employer, there are some facts to consider:
- Who has the authority to hire and fire, and to place or assign work to the employee;
- Who decides how, when, and the amount the employee is paid; and
- Who provides the employee’s leave or other employment benefits?
Employees who are jointly employed by two employers must be counted by both employers in determining employer coverage and employee eligibility under the FMLA, regardless of whether the employee is maintained on one or both employers’ payrolls.
New York State Paid Sick Leave Count for Joint Employers
Employees jointly employed by more than one employer must be counted by each employer, whether or not they are on the employer’s payroll for determining each employer’s leave obligation under the NYSPSL law.
Integrated Employers
Separate entities may be considered an integrated employer (or a single employer) depending on the entire relationship of the entities.
How Do I Know if I am an Integrated Employer?
Factors to consider when determining if two or more entities are an integrated employer are as follows:
- Common Management between the entities;
- Do the businesses share managers?
- Interrelation between operations;
- Does one business exist to provide service to the other business?
- Centralized control of labor relations;
- Do the businesses share payroll, HR, policy determination?
- Do the businesses share employees?
- Degree of common ownership/financial control;
- Are the businesses related to each other (for example, is one business a construction company and the other business is a steel company, and the steel company provides steel to the construction company)?
Please note, common ownership is the least significant factor of the test that courts look at. Courts deem the most important parts of the test to be centralization of functions and interrelation between operations.
FMLA Count for Integrated Employers
Because integrated employers are considered a single employer, all employees at all locations, and under all entities are counted for FMLA coverage purposes.
New York State Paid Sick Leave Count for Integrated Employers
When employers are considered a single entity or single employer, all employees at all locations and/or entities are counted for PSL coverage purposes.
Common Ownership
Multiple entities may have enough common ownership to be considered a single entity for tax purposes and under the Affordable Care Act. Common ownership is when five (5) or fewer people own 80% or more of each company, otherwise know as a “controlled group.”
How Do I Know If I Fall Under Common Ownership?
Under the IRS rules, if a business has one of the following relationships, a controlled group exists:
- Parent subsidiary;
- When one or more chains of business are connected through stock ownership with the same parent organization
- Brother-sister organizations; or
- When five or fewer people, estates, or trusts own a controlling interest of 80% in each business and own over 50% of the company’s stock or profits.
- A combination of the two
FMLA Count for Common Ownership Employers
Because Common Ownership employers are considered a single entity, all employees at all locations are counted for FMLA coverage purposes.
New York State Paid Sick Leave Count for Common Ownership Employers
When employers are considered a single entity or single employer, all employees at all locations and/or entities are counted for PSL coverage purposes.
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