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Capitol Correspondence - 01.13.20

DOL Issues Final, Updated Joint Employer Rule Under Fair Labor Standards Act

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The U.S. Department of Labor issued a final rule about the Fair Labor Standards Act on the use of joint-employer status. While this applies broadly to third-party employer and other joint-employer situations, it is relevant to certain types of disability supports. ANCOR’s Government Relations staff is in the process of analyzing this rule given its potential impact on member organizations, and we encourage you to stay tuned for ANCOR-issued resources on this topic.

As announced by the Department of Labor (DOL):

“Today, the U.S. Department of Labor (Department) announced a final rule to update the regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA). They have not been meaningfully updated in over 60 years. The FLSA requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek. Under the FLSA, an employee may have, in addition to his or her employer, one or more joint employers—additional individuals or entities who are jointly and severally liable with the employer for the employee’s wages.

In the final rule, the Department provides a four-factor balancing test for determining FLSA joint employer status in situations where an employee performs work for one employer that simultaneously benefits another person. The balancing test examines whether the potential joint employer:

  • hires or fires the employee;
  • supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • determines the employee’s rate and method of payment; and
  • maintains the employee’s employment records.

The final rule also clarifies when additional factors may be relevant to a determination of FLSA joint employer status, and identifies certain business models, contractual agreements with the employer, and business practices that do not make joint employer status more or less likely.

These revisions will add certainty regarding what business practices may result in joint employer status. This rule promotes greater uniformity among court decisions by providing a clearer interpretation of FLSA joint employer status.  These benefits will in turn improve employers’ ability to remain in compliance with the FLSA and will reduce litigation costs.

This final rule does not address “joint employer” status under other federal employment laws, such as the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act of 1974 (ERISA), the Migrant and Seasonal Agricultural Worker Protection Act, or Title VII of the Civil Rights Act.

The effective date of the final rule is March 16, 2020.

More information about the final rule is available at https://www.dol.gov/agencies/whd/flsa/2020-joint-employment.”