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April 2018

Joint Employment

One of the most contentious issues that faces employers today is the issue of joint employment.  The NLRB, the Department of Labor and the Courts have all had to deal with the vagaries that have grown up around this issue.  The NLRB had used a “direct and immediate” control test for more than 30 years in determining whether one entity exercised sufficient control over another entity’s employees to constitute joint employment.  That all changed in 2015 when the Obama administration’s NLRB adopted an “indirect” control test where merely having unexercised control over employees could be enough to establish an entity as a joint employer.  The NLRB under President Trump has attempted to return to the “direct and immediate” control test but it has been stymied by procedural issues.  In the meantime, the Department of Labor under President Trump has rejected the “indirect” control test that had been put in place under President Obama.  The courts have also shown a propensity to be bipolar in their approach towards joint employment.  The Fourth Circuit, for example, has shown a liking for the “indirect” control test whereas courts in the Eleventh Circuit have shown a willingness to utilize the “direct and immediate” control test.

When Mike Miller drafted the Employee Leasing Licensing Law in Florida in 1991, he included in the law at Section 468.525(4) the requirement that every Florida PEO service agreement:

(a) Reserves a right of direction and control over leased employees assigned to the client’s location. However, a client may retain such sufficient direction and control over the leased employees as is necessary to conduct the client’s business and without which the client would be unable to conduct its business, discharge any fiduciary responsibility that it may have, or comply with any applicable licensure, regulatory, or statutory requirement of the client.

(d) Retains authority to hire, terminate, discipline, and reassign the leased employees. However, the client company may have the right to accept or cancel the assignment of any leased employee.

(e) Retains a right of direction and control over management of safety, risk, and hazard control at the worksite or sites affecting its leased employees, including:

  1. Responsibility for performing safety inspections of client equipment and premises.
  2. Responsibility for the promulgation and administration of employment and safety policies.
  3. Responsibility for the management of workers’ compensation claims, claims filings, and related procedures.

Mike did not include this language in order to give a PEO control over a client’s business or employees.  Instead, he included this language to give PEO’s an insurable interest that would allow PEOs to provide insurance and benefits to employees.

To make it clear that PEOs did not intend to run a client’s business or exercise control over employees, our firm worked with the Board of Employee Leasing Companies to define what was meant by the above requirements.  These definitions are set forth at Florida Administrative Code Rule 61G7-6.001 and read as follows:

(9) “Reserves a right of direction and control over leased employees assigned to the client’s location” does not require the actual exercise of such direction and control by the employee leasing company at the job site at which or from which leased employees work. The client shall be allowed to exercise such direction and control as may be allocated to the client, in writing, and in conformity with Florida law.

(10) “Retains authority to hire, terminate, discipline, and reassign the leased employees” does not require the actual exercise of such authority by the employee leasing company at the job site at which or from which the leased employees work. The client shall be allowed to exercise such authority as may be allocated to the client, in writing, and in conformity with Florida Law.

(11) “Retains a right of direction and control over management of safety, risk, and hazard control at the worksite or sites affecting its leased employees, including:

  1. Responsibility for performing safety inspections of client equipment and premises.
  2. Responsibility for the promulgation and administration of employment and safety policies.
  3. Responsibility for the management of workers’ compensation claims, claims filings, and related procedures.

does not require the actual exercise of such direction and control by the employee leasing company at the work site at which or from which the leased employees work. The client shall be allowed to exercise such direction and control as may be allocated to the client, in writing, and in conformity with Florida law.

Given the uncertainties that surround joint employment and the likelihood that following the Trump administration, the next President’s administration may attempt to return to the “indirect” control test, it is our firm’s belief that Florida service agreements must include the 61G7-6.001 definitions.  Service agreements that merely quote the required language of Section 468.525(4) run the substantial risk of being found to establish the existence of unexercised control.