The U.S. Department of Labor (DOL) has finalized its rule to narrow the definition of a joint employer under the Fair Labor Standards Act (FLSA). The final rule is the first meaningful revision to the DOL’s joint employer regulation in over 60 years.
The DOL’s final rule includes a clear and concise four-factor balancing test for determining joint employer status under the FLSA. The balancing test looks at whether 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.
This final rule is limited to evaluating joint employer status under the FLSA and does not address joint employer status under other federal employment laws, such as Title VII, the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act of 1974 (ERISA), or the Migrant and Seasonal Agricultural Worker Protection Act.
The final rule goes into effect March 16.
Practice Pointer: Because different federal circuit courts have adopted varying standards defining joint employer status, this final rule is a welcome development in providing a uniform standard that will apply to all employers regardless of their location. The final rule is expected to provide a clearer interpretation of joint employer status under the FLSA which should help improve employers’ ability to comply.