Change to Joint Employer Rule

On January 12, 2020, the Department of Labor has issued its Final Rule on determining joint employment status. The rule will go into effect on March 16, 2020. The Fair Labor Standards Act (FLSA) states that when an employee does work for an employer that also benefits another person, that person will be considered as a joint employer when they act directly or indirectly in the interest of an employer in relation to the employee. The DOL has now adopted a four-factor test to help determine whether or not someone is acting directly or indirectly in the interest of an employer in relation to an employee. The test considers if someone:

  1. Hires or fires the employee;
  2. supervises and controls the employee’s work schedule or conditions to a substantial degree;
  3. determines the employee’s rate and method of payment; and,
  4. maintains the employee’s employment records.

The rule also specifies that economic dependence on a potential joint employer is not a relevant factor when determining joint employer status.

In addition, the DOL clarifies multiple factors that do not make joint employer status more or less likely. These include an employer’s franchisor or brand, similar business model, someone who merely provides or shares resources with an employer (such as sample handbooks, heath or retirement plans, or allowing an employer to operate a facility on its premises), and contractual agreements requiring an employer to establish policies and safety practices.

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