Department of Labor changes rules for joint employer status
The U.S. Department of Labor (DOL) recently announced changes to the rules for determining joint employer status under the Fair Labor Standards Act (FLSA). The new rules clarify what it means to be a joint employer under the FLSA, and list many helpful examples. The rules take effect March 16, 2020.
The DOL discusses two possible joint employer scenarios under the FLSA. In the first scenario, an employer is a joint employer if it employs the worker, but another person or entity acting on behalf of the employer benefits from that worker’s work. A typical example is a staffing company that sends a temp to work at a client’s location; usually both companies are joint employers. To determine whether the other person or entity is acting on behalf of the first employer (and is thus a joint employer), the DOL will look at whether the other person or entity:
- Hires or fires the worker;
- Supervises and controls the worker’s schedule or conditions of employment;
- Determines the worker’s method and rate of pay; and
- Maintains the worker’s employment records.
The rules state that no one factor determines joint employer status and that maintaining employment records won’t, by itself, make a person or entity a joint employer. More important in assessing each factor will be the degree to which the other person or entity actually exercises control over the worker. However, in a policy shift, the new rules make clear that the worker’s “economic dependence” on the other person or entity isn’t relevant for determining joint employer status, and that “no factors should be used to assess economic dependence,” including many factors that courts use to determine independent contractor status. In other words, the joint employer test is now explicitly different from tests for independent contractor status.
In the DOL’s second scenario, two separate employers employ a single worker for two different sets of hours in a single workweek. Under the new rules, the two employers will be joint employers if they are “sufficiently associated with respect to the employment” of the worker. The two employers are “sufficiently associated” if:
- There’s an agreement between them to share the worker’s services;
- One employer acts in the interest of the other employer in relation to the worker; or
- The two employers share control of the worker.
Tips For Employers: Joint employers are both liable for wage claims under the FLSA, and these new rules will affect how courts rule on future wage claims against alleged joint employers. Review the DOL’s fact sheet on the new rules, check out our Legal Guide, Temporary Employees, and call your Vigilant Law Group employment attorney with any questions.
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This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult legal counsel.