DOL Creates Proposed Rule for Joint Employer Status

On April 1, the U.S. Department of Labor (DOL) announced a proposed rule “to revise and clarify the responsibilities of employers and joint employers to employees” under the Fair Labor Standards Act (FLSA) [DOL, Notice of Proposed Rulemaking: Joint Employer Status, 4-1-19]. The DOL will publish the proposal in the Federal Register. A pre-publication version is available.

The Four-factor Test

The DOL proposes a four-factor test to replace the “not completely disassociated” standard. The test considers 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 includes examples; guidance on applying the test; factors that should and should not be considered; and clarifications that a business model, business practices, and contracts do not make joint employer status more or less likely.

Economic Dependence: Not Relevant

The DOL also said whether an employee is economically dependent on the potential joint employer is not relevant in determining the economic reality of the potential joint employer’s status under the FLSA.

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