California employers who share or interchange employees with another employer should know about the joint employer doctrine and its potential impact on an employer’s status as a “joint employer” for leave of absence purposes under the California Family Rights Act (CFRA) and federal Family and Medical Leave Act (FMLA).

A private employer is covered under FMLA and CFRA if it is engaged in any business or enterprise in California and directly employs 50 or more employees in any US state, the District of Columbia or any US territory or possession to perform services for a wage or salary. (Cal. Govt. Code § 12945.2(c)(2)(A);Title 2 of the California Code of Regulations, § 11087(d); 29 U.S.C. § 2611(4)(A)(i) and Title 29 of the Code of Federal Regulations, § 825.104.)

Where two or more businesses exercise some control over the work or working conditions of an employee, the businesses may be considered joint employers of the shared employee under FMLA and CFRA. Under the joint employer test, an employer that does not otherwise meet the 50-employee threshold may still have to provide FMLA/CFRA leave to its eligible employees if it “employs” enough jointly-employed employees to put them over the 50-employee threshold.

The FMLA regulations state:

(a) Where two or more businesses exercise some control over the work or working conditions of the employee, the businesses may be joint employers under FMLA. Joint employers may be separate and distinct entities with separate owners, managers, and facilities. Where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist in situations such as:

  1. Where there is an arrangement between employers to share an employee’s services or to interchange employees;
  2. Where one employer acts directly or indirectly in the interest of the other employer in relation to the employee; or,
  3. Where 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.

29 C.F.R. § 825.106(a).

The CFRA regulation is identical to the FMLA regulation, except the California regulation adds the following sentence:

A determination of whether or not a joint employment relationship exists is not determined by the application of any single criterion, but rather the entire relationship is to be viewed in its totality based on the economic realities of the situation.” (Title 2 of the California Code of Regulations, § 11087(d)(3).)

Where a joint employment relationship is found, the joint employee is counted by both employers, whether or not maintained on one of the employer’s payroll, in determining whether the 50-employee minimum is met. (Title 29 of the Code of Federal Regulations, § 825.106(d); Title 2 of the California Code of Regulations, § 11087(e)(4)(B).) The net effect of this is that a smaller employer (less than 50 employees) may be covered under FMLA/CFRA and therefore have to provide FMLA/CFRA leave to eligible employees even if it has less than 50 employees on its payroll.

If you have questions about whether a joint employment relationship exists, feel free to contact me at 925.930.6600 or dmarchiano@archernorris.com.