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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.