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April 8, 2019

Trump Administration Issues New Joint Employer Rule

On April 1, the U.S. Department of Labor released a proposed joint employer rule that would revise and clarify the responsibilities of employers and joint employers to employees under the Fair Labor Standards Act (FLSA). Under the Obama Administration, DOL had issued guidance stating a business was jointly liable even if it had only “indirect” control over employees.

The new proposal, which would replace the Obama administration regulation, provides a clearer method for determining joint employer status. Specifically, it proposes a four-factor test to determine whether an employer actually exercises the power to (1) hire or fire the employee, (2) supervise and control the employee’s work schedules or conditions of employment, (3) determine the employee’s rate and method of payment, and (4) maintain the employee’s employment records.

As HR Dive explains, the rule also outlines other factors could be relevant if the initial factors show the alleged joint employer, including whether an employer: exercises significant control over the terms and conditions of the employee’s work or is otherwise acts directly or indirectly in the interest of the employer in relation to the employee.

The DOL said that “whether an employee is economically dependent on the potential joint employer is ‘not relevant’ in determining that employer’s economic reality under FLSA” and, accordingly, “to determine joint employer status, no factors should be used to assess economic dependence.”

The proposal likely will be published for comment this week, with a 60-day comment period. Connecting the Dots will update readers when that comment period is activated.

Click here for more information from the DOL that explains the proposal.