The Department of Labor (DOL) on January 12 issued a final rule governing when two entities are considered joint employers and liable for an employee’s wages under the Fair Labor Standards Act (FLSA). The FLSA requires employers to pay at least the minimum wage and overtime to non-exempt employees who work in excess of 40 hours in a week.
NMHC and NAA commented favorably on the proposed version of the rule on April 29. The final rule will be effective March 16, 2020.
In the first meaningful update to joint employer regulations since 1958, DOL is proposing a four-factor test that would determine whether employers are joint employers. The test, which applies when an employee works for an employer but another individual or entity simultaneously benefits from that work, would consider whether the potential joint employer:
- hires or fires the employee;
- supervises and controls the employee’s work schedules or conditions of employment to a substantial degree;
- determines the employee’s rate and method of payment; and
- maintains the employee’s employment records.
According to the DOL, “whether an individual or entity is an FLSA joint employer will depend on all the facts in a particular case, and the appropriate weight to give each factor will vary depending on the circumstances. However, the final rule specifies that the potential joint employer’s maintenance of the employee’s employment records alone will not lead to a finding of joint employer status.”
DOL has provided a list of FAQs regarding how the final joint employer rule would apply: https://www.dol.gov/agencies/whd/flsa/2020-joint-employment/faq