Minimum Wage: When are multiple companies considered one employer?

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  • #2783307
    animalwithin
    Participant

    If one owner owns two corporations both with separate employees in two different cities, would we regard that as one employer or is it two separate employers?

    Minimum wage law is based off of the 26 or more/less employees so trying to figure out if we assume this is one employer because one guy owns both or if we teat it at the corporation level and keep them separate.

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  • #2784042
    fassopony
    Participant

    Is this CA? The state will interpret it as tightly as it can. If the companies are separate entities like two S Corps then they are two companies. If it is two companies that share the same EIN or an LLC/sole prop using a DBA then it is the same company.

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    #2784756
    Recked
    Participant

    You mention minimum wage, but is this more an overtime question? or is this some state specific?

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    #2784954
    animalwithin
    Participant

    This is California. This has nothing do to with the CPA exam, just an issue I'm having at work.



    @Fassopony
    , that is what I assumed since they are both separate S Corps with different EINs but my dad (whose been a CPA for 30 years insists they are one).

    @Recked, I guess this is a question of both. If these are two separate companies, but an employee works in both, I understand we have to treat is as a joint-employer which would grant him overtime based off of working in both locations. But is being a joint-employer automatically mean you treat these companies as one, in which case they have more than 26 employees so now the minimum wage rate will change vs. if we treated them as separate in which case they are less than 26 employees each.

    #2785836
    fassopony
    Participant

    CA is notorious for stepping into areas that is not legally its own so my assumption is it would most likely consider it “one” employer. I came across this link and found that the 9th has ruled on this exact scenario.

    “If the two companies are acting entirely independently of each other and are completely disassociated with respect to the employment of a particular employee, then overtime pay on the combined hours will not be owed. Instead, each company is responsible only for the hours worked by the employee for that company. But if instead the two companies are not completely disassociated, they may be held liable as joint employers, as set forth in the 2003 9th Circuit Court of Appeal case of Chao v. A-One Medical Services, Inc. (9th Cir.2003) 346F.3d 908,916-917. See also the regulation at 29 C.F.R. § 791.2(a).

    If in this example, the same owner used the exact same forms and criteria to hire employees for the adult day care facility as are used for the home for dependent adults, has the authority to hire and fire employees at both companies, uses and enforces the same HR policies at both companies, and uses similar or identical pay rates for employees at the two companies, then the adult day care facility and the home for dependent adults will likely be found to be joint employers – – and the single owner of both companies will be liable for overtime pay based on the combined hours worked at both companies. The fact that an employee exercised a degree of ‘choice’ in working extra hours above eight hours per day or forty hours per week when the hours worked at both companies are combined is not relevant to the issue of joint employment and the related liability on the single owner. Under both California wage law and the federal FLSA law, it is the employer’s obligation to know when an employee is working and the document the hours worked.”

    https://goyetteassociates.com/2013/09/can-two-different-companies-both-be-liable-for-wage-law-violations-as-joint-employers-of-the-same-employee/

    Keep in mind this was 2003, at the height of the liberal lah lah land era (thankfully now over) for the 9th but you could see if it has been challenged. CA is a regulatory nightmare, always know that if it can be stricter or more rigid that is how it will be interpreted.

    I don't even like going there to visit, it's like you can just feel the grubby little tax mongrels grubbing at your wallet even just visiting! LOL!!

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    #2786715
    animalwithin
    Participant

    @Fassopony, thank you for all the info! CA is indeed cursed with absolutely horrid laws, and it only gets worse.

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