Final Rule on Joint Employers Effective March 16, 2020

The U.S. Department of Labor (Department) just announced it will publish its final rule to update the regulations for joint employer status under the Fair Labor Standards Act (FLSA) on January 16, 2020. This is the first update of this regulation in over 60 years. Under the FLSA, an employee may have, in addition to a primary employer, one or more joint employers—additional individuals or entities who are jointly and severally liable with the employer for the employee’s wages.

The final rule has a four-factor balancing test for determining FLSA joint employer status. The balancing test looks at whether the individual or entity who benefits from the employees’ work:

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

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

Keep in mind that this only applies to the FLSA. Other laws, including the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act of 1974 (ERISA), the Migrant and Seasonal Agricultural Worker Protection Act, and Title VII of the Civil Rights Act, each have their own definition of joint employer.

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