ASE has long followed joint employment law, from disputes involving franchisors and management companies to issues with independent contractor classifications. While lawsuits often seem more like a looming risk than a reality, attorney Thomas O’Connel notes that joint employer cases are now a regular part of litigation. Employers should take notice and strengthen their understanding of these risks to avoid costly and complex disputes.

Mr. O’Connell points out several recent joint employment cases that have held that two employers be treated as one for the sake of the complaint. Though applying different joint employer test criteria, these courts all looked at the amount of control each company exercised around the plaintiff-employee’s work activities. Factors such as training practices, payroll oversight, corrective authority, control of workflow, or even partial ownership of a subcontracted company have all been used to establish joint employment, holding both employers legally accountable.

All these business entities had contracts with disclaimers. In many of these cases, it was clear that the parent or primary company maintained operational control—setting wages and benefits, processing payroll, directing policies, handling complaints, and exercising oversight. As a result, the contracting company was also held responsible for the actions of the subcontractor, and both were determined to be joint employers.

Though the federal government has sought to streamline the definition or criteria for determining whether joint employment can be found between two employers, the types of tests vary, and courts can ask different questions. O’Connell points out that courts will look to what is actually happening in practice: who is setting wages, processing payroll, which party allegedly directs policy implementation, who is fielding complaints, and who allegedly exercises oversight?

One other warning attorney O’Connell gives is to “guard against rogue actors.” These are managers that do not recognize the lines they cannot cross around the issue of worker control.

To put an exclamation point to the fact joint employment legal activity is rising on a lot of fronts, the Service Employees International Union (SEIU) filed a lawsuit with the D.C Circuit Court to have a regulation struck down that “made it easier for large companies to avoid bargaining when their franchisees or contractors unionize.”

In a brief filed last Friday, the SEIU argued that workers from a franchise operation should be able to force the franchisor company to the bargaining table, whether that parent company employs them or not, when the workers can show that the franchisor has control over their working conditions. This issue has been fought over for years. The case seeks to change an NLRB rule that recognizes the franchisee as the employer, not the franchisor, for the sake of collective bargaining. The case challenges how the NLRB adopted the rule but shows that unions know that getting at the parent company as the employer for franchise business employees is the key to organizing larger population of workers.

There is a lot happening in the realm of joint employment. It is recommended employers look at their contractors-subcontractor relationships to determine if they are exercising a bit too much control or oversight of their franchisees and other business partners to the point they can be determined as employers of those workers too.

Sources: Law360 Employment Authority. Lessons As Joint Employer Suits Shift from Rare to Routine. (9/26/25)  SEIU Fires Opening Shot In DC Circ. Joint Employer Rule Fight )9/29/25)