• If two entities use the services of one employee, all hours worked for both entities would be combined to calculate overtime pay.
• The WHD outlines specific associations that determine joint employment.

If a nonexempt employee works two or more jobs for the same employer, all hours worked must be combined for purposes of overtime. But what exactly constitutes the “same” employer? If the entities are separate, the employee would have two distinct employers, and hours worked for each employer could be considered individually. However, if two entities share an employee, then all hours worked for both companies would have to be combined for overtime.

Obviously, if someone owns two restaurants and sets employee schedules for both locations, then an employee who holds jobs at both locations works for the same employer. Similarly, if an employee’s schedule can be adjusted by one company to consider the needs of the other company, the employee would be shared. All hours worked in both locations must be counted toward overtime.

Unfortunately, not all situations are obvious. In many cases, an employer may have multiple facilities that appear to operate independently, but the U.S. Department of Labor (DOL) Wage and Hour Division (WHD) might still deem them to be joint employers (see 791.2, Joint employment), and if so, all hours worked in all locations must be counted toward overtime.

Factors that employers might be tempted to consider may not actually affect the joint employment determination. For instance, many employers believe that if each location has a different Federal Employer Identification Number (FEIN), or if each location hires and schedules its own employees according to need, then the facilities must be separate. However, the real questions should be whether the entity could share control over the employee, as well as the level of control by company officers.

The regulation gives a few factors to consider, but applies a fairly restrictive standard. Moreover, that standard is interpreted rather liberally by the WHD. The regulation says that if both facilities are “acting entirely independently of each other and are completely disassociated with respect to the employment of a particular employee,” then each job may stand alone for overtime.

The phrase “entirely” independent imposes a higher standard than “some” independence, and the phrase “completely disassociated” does not allow for limited association.

For example, an employer requested an opinion letter (FLSA2005-15) regarding possible joint employment and stated that each facility “has its own Human Resources (HR) Department, employee handbook, payroll system, retirement plan, and Federal [Employer] Identification Number. There is no regular interchange of employees among the facilities.” Nevertheless, the WHD found that the parent company was a joint employer, based on other information provided. Clearly, the distinctions in HR functions, payroll, and FEINs were not determinative.

The WHD has previously stated that if one business entity controls another through stock ownership, or through common corporate officers, then employees are jointly employed by the entities. Other factors that have been evaluated by the WHD include the following:

• The two entities share a common president and board of directors,
• One HR department provides administrative support for another entity,
• Senior executives and senior managers are responsible for more than one entity,
• Personnel policies are the same (even if different handbooks are printed),
• Employees share a common health plan, and
• Job vacancies are posted at multiple facilities before being publicly advertised.

If these types of associations exist, the entities are not “completely disassociated” as required by the regulation. The WHD will typically determine that these factors outweigh issues such as separate payroll systems or FEINs.

Employers that operate multiple locations will need to carefully evaluate joint employment requirements and determine if any individuals (especially part-time employees) have taken jobs at more than one location. If so, and if total hours worked exceed 40 per week, overtime pay is likely required.