DOL releases final rule to clarify joint employment

On January 12, 2020, the U.S. Department of Labor (DOL) announced the release of a final rule clarifying issues surrounding joint employment, which is of particular interest to employers that use staffing agencies, have franchise relationships, and rely on subcontractors. The effective date of the new rule is March 16, 2020.

When does the joint employer rule come into play? The Fair Labor Standards Act (FLSA) requires that employees be paid at least the minimum wage for all hours worked. Nonexempt employees must be paid overtime for any hours worked over 40 in a workweek. That's relatively straightforward when there is only one employer. But if an individual is jointly employed by more than one employer, it's more complicated to ensure the employee's wages are properly paid. If there is a joint employment relationship, each employer can be held liable for the full amount of the wages owed to the employee.

When it comes to overtime, if an employee works for two completely independent employers at the same time, no overtime is owed as long as the individual works no more than 40 hours for either employer. If an employee is employed jointly by two or more employers, however, overtime is owed if the individual's combined hours for the joint employers exceed 40 in a workweek.

Employee works for one employer, benefits another