Final Rule On Joint Employer Status Under The Fair Labor Standards Act

On January 12, 2020, the Department of Labor issued a final rule updating its interpretation of "joint employer" status under the Fair Labor Standards Act (FLSA).

The FLSA requires covered employers to pay their non-exempt employees at least the federal minimum wage and overtime. Under the FLSA, an employee may have, in addition to his or her employer, one or more joint employers, i.e., additional individuals or entities who are jointly and severally liable with the employer for the employee's required minimum wage and overtime pay.

The final rule provides guidance for determining when individuals or entities are considered joint employers, and constitutes the Department of Labor's official interpretation of joint employer status under the FLSA.

The Department of Labor sets forth a four-factor balancing test for determining joint employer status in situations where a potential joint employer benefits from the work performed by another employer's employees. The balancing test is derived from Bonnette v. California Health & Welfare Agency, 704 F.2d 1465 (9th Cir. 1983), and 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 provides that no single factor is dispositive in determining...