US Department of Labor Issues Proposal for Joint Employer Regulation

Window & Door
April 2, 2019
Government

The U.S. Department of Labor announced a proposed rule to revise and clarify the responsibilities of employers and joint employers to employees in joint employer arrangements.

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.

"This proposal will reduce uncertainty over joint employer status and clarify for workers who is responsible for their employment protections," says Secretary of Labor Alexander Acosta. "Providing public notice and comment is the best way to move forward with another significant deregulatory proposal."

In 2017, the Department withdrew the previous administration's sub-regulatory guidance regarding joint employer status that did not go through the rulemaking process that includes public notice and comment.

The Department proposes a clear, four-factor test based on well-established precedent 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 explains the statutory basis for joint liability, helping to ensure that the Department's joint employer guidance is fully consistent with the text of the FLSA," says Keith Sonderling, acting administrator for the Department's Wage and Hour Division. "The proposed changes would provide courts with a clearer method for determining joint employer status, promote greater uniformity among court decisions, and reduce litigation."

The proposal also includes a set of joint employment examples for comment that would further assist in clarifying joint employer status.

The Department has not meaningfully revised its joint employer regulation since 1958.