DOL Proposes New Joint Employer Rules

April 03, 2019
Publication
Inside HR
HR Compliance

On April 1, 2019, the U.S. Department of Labor (DOL) announced a proposed rule to revise and clarify the responsibilities of employers and joint employers to employees in joint employer arrangements. The DOL has not meaningfully revised its joint employer regulation since 1958.

The Fair Labor Standards Act (FLSA) allows joint employer situations where an employer and a joint employer are jointly responsible for the employee’s wages. This proposal would ensure employers and joint employers clearly understand their responsibilities to pay at least the federal minimum wage for all hours worked and overtime for all hours worked over 40 in a workweek.

The DOL is proposing a four-factor test that would consider whether the potential joint employer actually exercises the power to:

  • Hire or fire the employee;
  • Supervise and control the employee’s work schedules or conditions of employment;
  • Determine the employee’s rate and method of payment; and
  • Maintain the employee’s employment records.

The proposal also includes a set of examples for comment that would further help to clarify joint employer status, along with a set of FAQs and Fact Sheet.

The DOL encourages any interested employers to provide feedback about the proposed rule electronically at a www.regulations.gov. There will be a 60-day period to submit comments.

Key Takeaway

In June 2017, the DOL withdrew its 2015 and 2016 informal guidance on joint employment and independent contractors. Since that time, franchise organizations and any business providing contracted services have been looking for better clarity around defining joint employer status for purposes of overtime payment responsibilities.

Last year, the NLRB proposed its own joint employer rule to clarify who would be part of union negotiations. The final rule is expected later this year.

While both rules are independent of each other, it is expected there will be some similarities, and that both will try to finalize a narrower definition of what joint employment means for purposes of workplace protections.

Source: DOL.gov, Michael Hyatt, Director, HR Government Affairs, MRA – The Management Association