Two Separate but Related Businesses Are Sometimes Counted as One Employer Under the FMLA.
In some circumstances, the FMLA treats multiple business entities, like a corporation and its subsidiaries, as a single entity. This can happen under two separate tests: the joint employment test and the integrated employer test. Both tests look at the totality of the relationship between two (or more) entities.
The joint employment test addresses two or more business entities controlling an employee’s work or working conditions. When an employee performs work that simultaneously benefits two or more employers, or works for two employers at separate times during the work week, a joint employment relationship may be found. The factors that are important to this analysis are:
- There is an arrangement between employers to share an employee’s services or to interchange employees;
- One employer acts directly or indirectly in the interest of the other employer in relation to the employee; or,
- The employers are not completely disassociated with respect to the employee’s employment and may be deemed to share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.
The integrated employer test addresses separate but related entities and when they are treated as a single employer under the FMLA. This is done by weighing four factors:
- Common management;
- Interrelation between operations;
- Centralized control of labor relations; and
- Degree of common ownership/financial control.
If either of these two tests is satisfied, the employee headcount of the two (or more) businesses added together can easily surpass the FMLA’s 50-employee threshold and subject a sometimes-unaware employer to FMLA obligations.
For example, in one case, an employee was terminated for taking days off to care for his seriously ill wife. The employee asserted an interference with his FMLA rights, and the employer countered that the FMLA did not apply because it only had 25 employees. However, the employer actually owned three businesses. Applying the integrated employer test, the court found that the three businesses shared common management and a common president. Further, the president owned all three businesses and had control over hiring, firing, and compensation reviews for employees of each business. Accordingly, the three companies were found to be so interrelated that they constituted a single, integrated employer under the FMLA. This pushed the total employee count in excess of 50 employees and imposed the FMLA’s obligations on the employer.
FMLA Eligibility Is Sometimes a Surprise When Temporary Workers Are Later Hired Directly by a Primary Employer.
In addition to complications arising from an integrated employer, another issue that sometimes surprises employers is failing to account for time worked as a temporary employee.
When determining if an employee has been employed for at least twelve months, it is essential to remember that the twelve months do not have to be consecutive. All time spent working for the covered employer counts towards this minimum, which often will include any time worked as a temporary or “staffed” employee. Only when an employee takes a break of service of seven years or longer do the previous months of employment not count anymore.
Consider the example of an employer that hires a temporary worker through a staffing agency for seven months. The employer then hires the employee directly, and six months later the employee seeks FMLA leave due to a bodily injury. Believing the employee was not eligible because they had only been “hired” six months before, the employer denies FMLA leave. However, the employee was indeed eligible: the employee’s six months as a temporary employee and seven months as a permanent employee aggregate to thirteen months, which is sufficient to pass the twelve-month threshold. The employer has therefore violated the FMLA.
If you are an employer facing FMLA eligibility concerns or have any related questions, please do not hesitate to contact any of our attorneys. At K|W|W, your workforce is our priority.