The U.S. Department of Labor (DOL) announced a proposed rule to update the Fair Labor Standards Act (FLSA) joint employment regulations on Monday.
The rules govern circumstances in which multiple employers can be held responsible for wage and hour violations. The proposal seeks to ensure employers and joint employers better understand their responsibilities to pay at least the federal minimum wage for all hours worked and overtime for all hours worked over the 40-hour workweek.
The DOL’s proposal includes a “four-factor balancing test” that would consider whether the potential joint employer has the power to:
- Hire or fire the employee;
- Supervise and control the employee’s work schedules or conditions of employment;
- Determine the employee’s rate and method of payment; and
- Maintain the employee’s employment records.
The DOL said its proposal will explain additional factors that may be relevant if the initial factors show the alleged joint employer:
- exercises significant control over the terms and conditions of the employee’s work; or
- otherwise acts directly or indirectly in the interest of the employer in relation to the employee.
The DOL stated that whether an employee is economically dependent on the potential joint employer is “not relevant” in determining that employer’s economic reality. “Accordingly, to determine joint employer status, no factors should be used to assess economic dependence,” the proposal said.
This proposed regulation has been submitted to the Office of the Federal Register (OFR) for publication and is currently pending placement on public inspection at the OFR and publication in the Federal Register. The public will have 60 days to comment on the proposed regulation; the comment period will begin on the date of publication in the Federal Register.