DOL Final Rule On Joint Employer Status

THE U.S. DEPARTMENT OF LABOR HAS BEEN HARD AT WORK.

Right on the heels of its Final Rule on Overtime, the DOL just issued its Final Rule on Joint Employer Status. What does that mean for you, Average Joe Employer? Maybe nothing. However, if you're an employer who routinely works with contractors or you operate as a franchise, complying with this new rule could mean the difference between building your business or spending your time with a DOL investigator.

LET'S START WITH THE BASICS

The Fair Labor Standards Act (FLSA) requires covered employers to pay employees the federal minimum wage (your mileage may vary if you're in a state with a minimum wage that is higher or lower than the $10.00 per hour federal minimum wage) and time and a half for all hours worked over 40 in a single workweek. Beyond that, some employers may have employees who perform work that also helps another employer.

Sound familiar? If so, I'm talking to you. Let's go straight to the Rule:

The Final Rule gives employers "a four-factor balancing test for determining FLSA joint employer status in situations where an employee performs work for one employer that simultaneously benefits another entity or individual. The balancing test examines 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." The Final Rule also provides additional factors that may (or may not) be relevant in determining whether an employee is jointly employed by more than one employer including certain business models (like franchises) and contractual agreements with the employer (as in the case of a contractor and subcontractor).

WHAT IS...