Trifecta! DOL Issues Proposed “Employer-Friendly” Joint Employer Rule

Jason E. Reisman

Yesterday, the U.S. Department of Labor (“DOL”) completed the wage and hour trifecta, issuing the third of its critically acclaimed proposed rules—this one redefines (or clarifies, if you prefer) the regulations addressing the concept of “joint employment.” Joint employment under the Fair Labor Standards Act (“FLSA”) is an important concept as it often is used to hold multiple entities liable for the minimum wage and overtime violations relating to a group of employees. The existing regulations have not been materially updated in more than 60 years—needless to say, the nature and scope of business interactions have changed materially over that time.

Remember, in the last few weeks, the DOL issued (1) its long-awaited proposed rule to increase the salary threshold for the white collar exemptions (an effort to finally supersede the proposed $47,476 threshold suggested by the Obama administration) and (2) its “out of the blue” proposed rule to update the “regular rate of pay” rules. Please refer to our recent blog posts on those subjects here and here.

Now, the DOL has offered proposed additional guidance to help employers navigate the murky-at-best waters of joint employment. On its website (here), the DOL has provided a great deal of material and insight—including multiple detailed examples –to summarize the key features addressed. This latest proposed rule will impact, among others, staffing company arrangements, subcontractor relationships, business association membership benefits, and franchisor/franchisee agreements. Essentially, the DOL is working to narrow, and likely reduce, the circumstances in which businesses will be considered joint employers, thereby lessening the risk of sharing joint and several liability. The DOL’s release states that the DOL has proposed “a clear, four-factor test—based on well-established precedent—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.”

Stay tuned as this proposed new rule winds its way through the administrative process, triggering a 60-day public comment period and ultimately the issuance of a final rule, which we expect by sometime early in 2020.

Interestingly, please don’t forget that our other “favorite” agency—the National Labor Relations Board—is also hard at work with its own proposed “joint employer” rule, which is expected to be tremendously employer-friendly! Let’s go, government—keep the “good” rules coming!

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