News & Insights

Department Of Labor Issues Final Rule On Joint Employer Status Under The Flsa

On January 16, 2020, the U.S. Department of Labor published in the Federal Register the Final Rule regarding joint employer status under the Fair Labor Standards Act (“FLSA”). These changes to the rule are the first meaningful revisions to the regulations in more than 60 years.

The Final Rule discusses two joint employer scenarios: (1) where an employee’s hours worked for one employer simultaneously benefits another employer; and (2) where the employee works separate sets of hours for different employers in the same workweek.

In the first scenario, the Department of Labor has adopted a four-factor balancing test from Bonnette v. California Health & Welfare Agency, 705 F.2d (9th Cir. 1983) to assess whether the purported joint employer:

          (1)             Hires or fires the employee;

          (2)             Supervises and controls the employee’s work schedules or conditions of employment;

          (3)             Determines the employee’s rate and method of payment; and

          (4)             Maintains the employee’s employment records.

The Final Rule clarifies that not all four factors must be satisfied and that “[n]o single factor is dispositive in determining joint employer status, and the appropriate weight to give each factor will vary depending on the circumstances.”

With regard to the second scenario, the new rule does not alter the standard for determining joint employer status. Here, a joint employer finding requires that the two employers “share the employees’ services, the potential joint employer is acting directly or indirectly in the interest of the other employer in relation to the employees, or they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.”

The new standards reflected in the Final Rule go into effect on March 16, 2020. The new rule will encourage uniformity among the federal courts that have articulated their own tests for joint employment. Employers in Alabama should analyze the status of their employer-employee relationships as this may have significant consequences, as a joint employer can be held jointly and severally liable for FLSA wage and hour obligations to the employee.