January 20, 2020

U.S. Labor Department Releases Final Joint Employer Rule

On January 12, the U.S. Department of Labor (DOL) issued its final rule on “joint employer” status under the Fair Labor Standards Act. Under the new rule, manufacturers and businesses of all industries will enjoy greater clarity surrounding their employees and the employees of their business partners.

As readers will recall, the previous presidential administration issued an expanded definition of who could be considered a joint employer. That rule, which now has been abandoned, would have increased employers’ compliance costs and threatened long-established business models used by the manufacturing sector.

The DOL’s new rule establishes a four-part test to assess joint employment, which occurs when two or more companies share responsibility over a group of employees. The final regulation, available here, asks if 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.

In a fact sheet, DOL explained that determining joint employment “will depend on all the facts in a particular case, and the appropriate weight to give each factor will vary depending on the circumstances.” It also clarified that additional factors may be relevant when determining joint employment “but only when they show whether the potential joint employer is exercising significant control over the terms and conditions of the employee’s work.”

Click here to find more information from the DOL, and to read the final regulation.