U.S. DEPARTMENT OF LABOR ISSUES NEW DEFINITION OF “JOINT EMPLOYER”

On Jan. 12, 2020, the U.S. Department of Labor announced a final rule to update the regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA).

Under the FLSA, an employee may have, in addition to his or her employer, one or more joint employers—additional individuals or entities that are jointly and severally liable with the employer for the employee’s wages. The FLSA requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek.

 In the final rule, the DOL provides a four-factor balancing test for determining FLSA joint employer status in situations where an employee performs work for one employer that simultaneously benefits another entity or individual. The balancing test examines whether the potential joint employer:

  • Hires or fires the employee;
  • Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • Determines the employee’s rate and method of payment; and
  • Maintains the employee’s employment records.

This new definition will impact lawsuits involving franchisor – franchisee agreements, staffing agency placement of employees, and other similar situations.

If you have any questions concerning the impact of this new Regulation on your employment status, feel free to contact us for more information.