Under the California joint employer test, a business is treated as a joint employer of someone else’s worker if it meets any one of three independent definitions of “to employ” that the California Supreme Court drew from the Industrial Welfare Commission Wage Orders in Martinez v. Combs: it exercises control over the worker’s wages, hours, or working conditions; it suffers or permits the work; or it engages the worker under the common law.1Justia Law. Martinez v. Combs Satisfying any one prong is enough. Once two entities qualify, both are fully liable for wages, penalties, and other employment obligations tied to that worker, regardless of who issued the paycheck.
The Three Prongs From Martinez v. Combs
The Wage Orders define “employ” as “to engage, suffer, or permit to work.”2Division of Industrial Relations. IWC Wage Order No. 5 – Public Housekeeping Industry Martinez split that phrase into three alternative tests. A worker only has to satisfy one of them to establish joint employment for wage and hour purposes.1Justia Law. Martinez v. Combs
Prong A: Control Over Wages, Hours, or Working Conditions
The first prong asks whether the entity exercises control, directly or indirectly, over the worker’s wages, hours, or working conditions.1Justia Law. Martinez v. Combs Courts examine this prong most often. The control does not have to be hands-on or daily. A company that dictates a staffing agency’s pay rates, sets shift schedules, or imposes workplace rules can satisfy Prong A even when the staffing agency handles direct supervision. The focus is on who actually holds authority over working conditions, not on what the contract says.
Prong B: Suffer or Permit to Work
The second prong reaches any entity that knows work is being performed, has the power to prevent it, and allows it to continue. This is the broadest of the three because it does not require actual control. Benefiting from the work, knowing about it, and having the ability to stop it is enough.
The “suffer or permit” phrase itself is not unique to California. The federal Fair Labor Standards Act uses almost identical language.3Office of the Law Revision Counsel. 29 U.S. Code 203 – Definitions What Martinez did was elevate it into a standalone pathway to liability under the Wage Orders, independent of control and independent of the common law test.
Prong C: Engaging the Worker
The third prong is the traditional common law test: did the entity engage the worker, with the right to control the manner and means by which the job gets done? It is the narrowest of the three and resembles the standard used in many other states. Under Martinez, it is simply one of three routes to joint employer status.1Justia Law. Martinez v. Combs
What Courts Actually Look At
The prongs are legal categories. In practice, judges work through a factual checklist drawn from Bonnette v. California Health and Welfare Agency to decide whether any prong is met:4Justia Law. Bonnette v. California Health and Welfare Agency, 525 F. Supp. 128
- Who has authority to hire and fire the worker.
- Who sets daily hours, shifts, and days off.
- Who determines the rate and method of payment.
- Who directs how the work is performed day to day.
- Who maintains employment records, timekeeping, and payroll.
No single factor is decisive. A company that controls only one or two of these can still qualify as a joint employer under Prong A if the control it exercises shapes the worker’s core employment experience. Contract clauses that reserve the right to control are treated as evidence of indirect control even when the right is rarely used. Courts prioritize the real economic relationship over the labels in the paperwork.
Indirect control is where the test often turns. A retail chain that contracts with a cleaning company but dictates how many workers must be on each shift, requires compliance with its own safety manual, and reserves the right to remove any worker it finds unsatisfactory has likely crossed into joint employer territory under Prong A, even though the cleaning company issues the paychecks.
Staffing Agencies: Section 2810.3 Skips the Test Entirely
For businesses that use staffing agencies or labor contractors, California has a statute that bypasses Martinez altogether. Labor Code Section 2810.3 makes a client employer automatically share civil liability with any labor contractor that supplies workers for the client’s usual course of business.5California Legislative Information. California Labor Code LAB 2810.3 The shared liability covers two areas:
- Payment of wages. If the labor contractor underpays, the client is equally on the hook.
- Workers’ compensation. If the labor contractor fails to secure valid coverage, the client shares that liability.
Section 2810.3 also blocks a client employer from shifting its Cal/OSHA workplace safety obligations onto the labor contractor.5California Legislative Information. California Labor Code LAB 2810.3 The business using temporary workers stays responsible for a safe worksite no matter what the staffing contract says.
The statute carves out some exemptions. It does not apply to businesses with a total workforce under 25, or to those using five or fewer supplied workers at any given time. Government entities are also exempt.5California Legislative Information. California Labor Code LAB 2810.3 A worker suing a client employer under this section must give at least 30 days’ written notice of the alleged violations first.
What Joint Employer Status Costs
When two entities qualify as joint employers, both become liable for the full range of California wage and hour obligations. The worker can pursue recovery from either entity or both for the complete amount of damages. In practice, the entity with deeper pockets often ends up paying even if the other was more directly at fault.
Wages and Overtime
Joint employers share responsibility for minimum wage, overtime, and meal and rest break compliance. Under Labor Code Section 1194, any employee receiving less than the minimum wage or legally required overtime can recover the full unpaid balance, plus interest and attorney’s fees, from any entity that qualifies as an employer.6California Legislative Information. California Labor Code 1194 That recovery right cannot be waived by contract.
PAGA Penalties
Joint employers face exposure under the Private Attorneys General Act, which allows employees to sue on the state’s behalf for Labor Code violations. Penalties apply per employee, per pay period. After the 2024 PAGA reforms, 65% of recovered penalties go to the Labor and Workforce Development Agency and 35% go to the affected workers. Employers who can show they were already taking reasonable compliance steps before receiving a PAGA notice may be able to cap their maximum penalty at 15% of the amount originally sought.7Labor and Workforce Development Agency. Private Attorneys General Act (PAGA) Frequently Asked Questions
Personal Liability for Owners and Managers
Joint employer liability does not stop at the corporate entity. Under Labor Code Section 558.1, any owner, director, officer, or managing agent who causes wage and hour violations can be held personally liable as an employer.8California Legislative Information. California Labor Code LAB 558.1 The statute states explicitly that it does not limit the broader definition of employer under existing law, so it operates alongside the Martinez framework.
Franchisors Are Not Automatically Joint Employers
Franchising is where readers most often assume joint employment follows automatically. California courts have drawn a clearer line here. In Patterson v. Domino’s Pizza (2014), the Court of Appeal held that a franchisor’s brand standards and operational manuals do not make it a joint employer of the franchisee’s workers. The franchisee hires and fires store employees and regulates day-to-day workplace behavior, even where the franchisor imposes a comprehensive operating system. The court separated brand consistency from employment control.
A similar result followed in Salazar v. McDonald’s Corp., where the court found that McDonald’s operating standards protected brand identity but did not reach hiring, firing, or personnel decisions. Requiring uniform procedures, quality standards, and branding compliance does not by itself create joint employment. But a franchisor that sets wage rates, dictates shift scheduling, or makes termination decisions for a franchisee’s workers moves back into Prong A territory.
The Test Is Narrower for Discrimination Claims
The expansive Martinez framework applies to wage and hour claims under the Wage Orders and the Labor Code. Claims under the Fair Employment and Housing Act for discrimination or harassment use a narrower common law test that focuses more strictly on the right to control the manner and means of the work. An entity found to be a joint employer for overtime purposes may not be a joint employer for a harassment claim arising from the same workplace.
Cal/OSHA uses its own framework. Under its dual-employer inspection policy, both the company that supplies the worker and the company that uses the worker can be cited for safety violations at the worksite.9Division of Occupational Safety and Health. California Policy and Procedures Manual P and PC C-1D – Dual-Employer Inspections The supplying employer typically handles payroll, workers’ compensation, and hiring, while the using employer controls the physical work environment. Both can be cited for violations affecting the same worker.