? This is not a marijuana question.
The U.S. Department of Labor this month released a new, business-friendlier "final rule" to update and revise its regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA). Labor law uses the term “joint employer” to describe a situation where it is alleged that more than one entity or person is liable as an employer of an employee. This situation often arises, for example, with temp workers who are supervised and directed by a customer-employer, or employees of a franchise operation who seek to sue both the local franchisee and the franchisor that controls and sets some of the terms of employment.
The new rule is far too complex and lengthy to adequately summarize here, but a key highlight is that it adopts a four-factor test set forth in some case law and in the proposal from the DOL in 2019, focusing on whether the alleged joint employer:
(1) Hires or fires the employee;
(2) Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
(3) Determines the employee’s rate and method of pay; and
(4) Maintains the employee’s employment records.
No single factor is dispositive, and the new test focuses on whether the alleged joint employer actually exercises control – not just its ability, power or reserved right to do so.
Perhaps most helpfully, the new rule provides nine examples that can help guide employers in determining whether they may be liable as a joint employer for shared workers, contractor workers, franchisee employees, and other common joint-employer situations.Employer groups such as the International Franchise Association have praised the new rule, while employee advocates have criticized it as “drastically narrowing” joint employer coverage and liability.