While you guys were watching the NFL playoffs yesterday, a little birdie told me that the U.S. Department of Labor had announced its final rule to update its joint-employer regulations.
Here’s the skinny.
The Fair Labor Standards Act 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.
But, here’s the thing. Under the FLSA, an employee may have, in addition to his or her employer, one or more joint employers—additional individuals or entities must also pay the employee’s wages.
For the first time in 60 years, yesterday, the DOL more closely defined that joint-employer test. The DOL’s press release has both the final rule and the condensed version. Since I don’t want to crash your server, I’m going to quote from the condensed version:
In the final rule, the department 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.
The four-factor test comes from this case. Whether an individual or entity is an FLSA joint employer will depend on all the facts in a particular case, with no one factor being entirely dispositive.
In other words, ¯\_(ツ)_/¯
Some additional factors could factor into whether two entities are joint employers. For example, if one employer economically depends on the other, they are not necessarily joint employers for FLSA purposes. Additionally, an employer’s franchisor, brand and supply, or similar business model and certain contractual agreements or business practices do not make joint-employer status under the FLSA more or less likely.
If you’d like more information on the final joint employer rules, check out these resources:
- Fact Sheet: Final Rule on Joint Employer Status under the Fair Labor Standards Act
- Joint Employer Final Rule Frequently Asked Questions
Maybe your business operates as a franchise, or possibly your business works closely with another entity. If so, you’ve got until March 16 to get with a lawyer to identify whether the two operations form a joint-employer relationship.