The U.S. Department of Labor (DOL) announced a final rule, on January 16, 2020, updating the definition of “joint employer” under the Fair Labor Standards Act (FLSA). The DOL states this revision is “in order to promote certainty for employers and employees, reduce litigation, promote greater uniformity among court decisions, and encourage innovation in the economy.” This rule will be effective March 16, 2020.
The Department is adopting a four-factor balancing test derived from Bonnette v. California Health & Welfare Agency to assess whether the other person:
(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 payment; and
(4) maintains the employee’s employment records.
No single factor is dispositive in determining joint employer status, and the appropriate weight to give each factor will vary depending on the circumstances. However, satisfaction of the maintenance of employment records factor alone does not demonstrate joint employer status.
The National Labor Relations Board issued its final rule on February 26, 2020, governing joint-employer status under the National Labor Relations Act. The final rule restores the joint-employer standard that the Board applied for several decades prior to the 2015 decision in Browning-Ferris, but with the greater precision, clarity, and detail that rulemaking allows. As a result, the final rule provides clear guidance in this significant area of the law.
The NLRB’s new joint employer rule will go into effect April 27, 2020.
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