DOL Proposed Rule to Narrow Definition of Joint Employer Under FLSA

By: Jessica Jackler

On April 1, U.S. Department of Labor (DOL) announced its proposed rule to narrow the definition of a joint employer under the Fair Labor Standards Act (FLSA). The DOL has not meaningfully revised its joint employer regulation in over 60 years. According to the DOL, this proposal would ensure employers and joint employers clearly understand their responsibilities to pay at least the federal minimum wage for all hours worked, and any overtime for hours exceeding over 40 in a workweek.

The DOL proposes a clear and concise four-factor test that would consider whether the potential joint employer actually exercises the power to:

  • hire or fire the employee;
  • supervise and control the employee’s work schedules or conditions of employment;
  • determine the employee’s rate and method of payment; and
  • maintain the employee’s employment records.

This proposed rule is limited to joint employment under the FLSA and does not address joint employment under other federal statutes. As such, it is separate from the proposed National Labor Relations Board (NLRB) rule defining joint employment under the National Labor Relations Act that is expected to be finalized later this year. Read our post on NLRB’s proposed rule here.

The public will have 60 days to comment on the proposed regulation before any final rule is developed.

Practice Pointer: Because different federal circuit courts have adopted varying standards defining joint employer status, a DOL regulation may be a welcome development to provide a universal standard that will apply to all employers regardless of their location. However, this is just a proposal and we expect to see legal challenges to it before any final rule may be promulgated.

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