Under the Fair Labor Standards Act (“FLSA”), two or more employers may be jointly responsible for an employee’s wages, which is referred to as “joint employment.”
In April, the U.S. Department of Labor (“DOL”), Wage and Hour Division issued a Notice of Proposed Rulemaking (“NPRM”) regarding joint employer status. With this proposed rule, the DOL sought to “revise and clarify the responsibilities of employers and joint employers to employees in joint employer arrangements.” The proposed rule would ensure that joint employers “clearly understand their responsibilities under the FLSA.”
The DOL proposes a four-factor test for the potential joint employer, which is consistent with the FLSA’s definition of “employer.” The test would assess whether the potential joint employer does the following:
- Hires or fires the employee;
- Supervises and controls the employee’s work schedule or conditions of employment;
- Determines the employee’s rate and method of payment; and
- Maintains the employee’s employment records.
The new rule would also include the following provisions:
- A person who is a joint employer is jointly and severally liable with the employer and any other joint employers for all wages to the employee under the FLSA;
- Examples which illustrate how the proposed rule applies; and
- A severability provision.
It is important to note that the wage and overtime requirements of the FLSA would not be affected by the proposed rule.
What Does This Mean For Employers?
If the proposed rule becomes final, then employers and joint employers will be able to clearly understand their responsibilities with respect to joint employment. This clarification will, in turn, reduce litigation and compliance costs, ease the administration of law, offer clearer guidance to courts, and potentially result in greater uniformity among court decisions.
For more information on the DOL’s NPRM regarding joint employer status, please contact the attorneys at York Bowman Law, LLC.