1.4 Definition of an Employer

The definition of an employer is straightforward: an entity that employs another to work on his or her behalf for pay. For employment law purposes, employer size is an important issue. Federal legislation proscribing employer behavior related to discrimination, disability protections, military service, and so on applies only to employers who have a certain number of employees. For example, in order for the Age Discrimination in Employment Act to apply, an employer must have at least 20 employees.1

Integrated Enterprise

For large employers, the determination of size is clear. However, sometimes an employer that does not appear to have the minimum number of employees to meet the statutory requirement may still be covered if the firm is part of an integrated enterprise. An integrated enterprise is one in which the operations of two or more employers are so intertwined that they can be considered a single employer for purposes of both federal statutory coverage and liability—an important consideration.

Factors that are considered in determining whether two or more firms constitute an integrated enterprise for employment law purposes include the following:

1. The degree of interrelation between operations, such as sharing management services, payroll, and office space

2. The degree to which the entities share management, as in having a common slate of managers, officers, and directors

3. The degree of common control of labor relations, as in human resources administration or personnel policy development

4. The level of shared ownership

The purpose of these factors is to establish the degree of control exercised by one entity over the operations of another entity. These factors are not exhaustive, nor is any single factor overriding as to the integrated enterprise question.

Joint Employer

Another important issue is when two or more entities not engaged in an integrated enterprise exert control over an employee, such that each entity may be considered an employer. The term joint employer describes this situation, which most often arises where a temporary staffing agency, in addition to the employer, has control over a worker at a firm. In such cases, that employee is counted for statutory coverage and liability purposes for each employer. For example, Susan files a charge against DeVille Corp. alleging that she was subjected to religious harassment. DeVille Corp. has 13 regular employees and 5 employees assigned by a temporary agency, who are jointly employed by DeVille and that agency. Here, DeVille has 18 employees for employment law purposes.

Covered Employment Agency

Importantly, a business is a covered employment agency—one subject to employment law regulation—if it regularly procures employees for at least one covered employer, whether or not it receives compensation for those services and whether or not it also refers workers for smaller, non-covered employers.

A labor organization is subject to federal employment law statutes as if it were an employer if any of the following are true:

1. It represents the employees of an employer.

2. Its membership exceeds a certain level.

3. It maintains a hiring hall that procures employees for at least one covered employer.

4. It is engaged in an industry affecting commerce.

This broad definition brings virtually all unions under federal and state employment law rules.