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Joint-employer status may come down to who cuts the paychecks

by on
in HR Management,Human Resources,Small Business Tax,Small Business Tax Deduction Strategies

You may be liable for wage-and-hour violations involving people you don’t ordinarily think of as actual employees.

That’s because California uses a long list of factors to consider when deciding whether someone is an employee. One of those factors: Who provides the individual’s paycheck and makes tax deductions? Another factor: Who gives directions to the worker?

Recent case:
Marshal Field claimed he was jointly employed by American Mortgage Express and professional employer organization Gevity HR. Field claimed that although he performed work for American Mortgage Express, his paychecks were provided by Gevity HR, which made all appropriate deductions and listed itself as his employer on the paystub.

The trouble began when someone at Gevity HR told Field he had to terminate everyone working in his office. He was then told he was terminated, too.

Field sued both companies, alleging he had been denied prompt payment of unpaid wages, benefits, bonuses and unused vacation time under the California Labor Code. Gevity HR denied it was Field’s employer.

But the court refused to dismiss the claim. It reasoned that the payroll functions performed by Gevity HR and the direct order Field got from someone at Gevity HR was proof it was at least a joint employer and thus liable under the California Labor Code. The case will now go to trial. (Field v. American Mortgage Express and Gevity HR, No. 09-01430, ND CA, 2009)

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