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Return to common sense: DOL publishes new joint employer regulations

March 2020 employment law letter
Authors: 
Martin J. Regimbal, The Kullman Firm

On January 16, 2020, the U.S. Department of Labor (DOL) Wage and Hour Division (WHD) published a new final rule on joint employer status under the Fair Labor Standards Act (FLSA) in the Federal Registry, effective March 15. If two companies are joint employers of an employee, they are jointly and severally liable for compliance and damages under the FLSA. The DOL updated its joint employer regulation to promote certainty for employers and employees, reduce litigation, promote greater uniformity among court decisions, and encourage innovation in the economy. The regulations set out two scenarios where there could be joint employer status. The first scenario, in which most litigation arises, encompasses the situation in which a third party simultaneously benefits from the employees' work for the employer. Let's take a closer look.

New regulations

The three most significant parts of the new regulations are:

(1)  The adoption of a four-factor balancing test to determine joint employer status;

(2)  The identification of factors not relevant to joint employer status; and

(3)  11 examples to help employers and courts apply the new regulations.

The four factors to analyze the potential joint employer's relationship with the employee are whether the potential joint employer:

(1)  Hires or fires the employee;

(2)  Supervises and controls her work schedule or conditions of employment to a substantial degree;

(3)  Determines her rate and method of payment; and

(4)  Maintains her employment records.

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