Happen to be employing? That’s funny (7)
I believe the answer is:
amusing
'that's funny' is the definition.
(amusing means funny or entertaining)
'happen to be employing?' is the wordplay.
'happen to be' becomes 'am' ('I happen to be...' means 'I am...').
'employing?' becomes 'using' (to employ is to use).
'am'+'using'='AMUSING'
(Other definitions for amusing that I've seen before include "Causing a smile" , "Droll" , "Providing entertainment" , "comic" , "might be funny" .)