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FMG Law Blog Line

New Rule, Who Dis? DOL Proposes Changes to Joint Employment Regulations

Posted on: April 8th, 2019

By: Will Collins

On April 1, 2019, the U.S. Department of Labor (“DOL”) announced notice of proposed rulemaking, amending the DOL regulations addressing joint employers under the federal wage and hour law (i.e. the Fair Labor Standards Act (“FLSA”)) and providing guidance and clarification long sought by employers.

The proposed changes announced last week mark the first revision to the DOL’s joint employment regulations since originally promulgated in 1958.

The proposed changes, which seek to address the situation where an employee works for his or her employer and that work simultaneously benefits another person or entity, offer a Four-Part Test to determine if an organization is a joint-employer by assessing whether that organization:

  1. Hires or fires the employee;
  2. Supervises and controls the employee’s work schedule or conditions of employment;
  3. Determines the employee’s rate and method of payment; and
  4. Maintains the employee’s employment records.

The DOL’s proposed changes also makes clear that only actual actions taken, “rather than the theoretical ability to do so under a contract, are relevant to joint employer status.”

The proposed changes also clarify that certain business models (such as franchises), practices, and agreements do not make joint employment more likely.

Under the proposed changes, examples activities not indicative of joint employment include:

  • Providing a sample handbook or other forms as a part of a franchise agreement;
  • Allowing employer to operate a facility on its premises; or
  • Offering or participating in an association health or retirement plan.

And examples of agreements that do not indicate joint employment include contractual provisions requiring an employer to maintain:

  • workplace safety practices;
  • a wage floor;
  • sexual harassment policies; or
  • other measures to encourage compliance with the law or to promote desired business practice

Take Away

The proposed changes would provide welcome clarity for employers and, through its articulation of a Four-Part Test, examples of business models, practices, and agreements that do not indicate joint employment, and the list of illustrative hypotheticals addressing specific joint employment scenarios, the proposed changes would provide needed guidance and certainty to joint employment in the FLSA context.

Now subject to a 60-day public comment period, we will continue to monitor the DOL’s proposed changes to the joint employment regulations.

If you have any questions or would like more information, please contact Will Collins at [email protected].

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