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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On January 12, 2020, the U.S. Department of Labor (DOL) published its final rule revising and updating its regulations interpreting “joint employer” status under the Fair Labor Standards Act (FLSA). The FLSA requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek. To be liable for paying minimum wage or overtime, an individual or entity must be an “employer,” which the FLSA broadly defines to include “any person acting directly or indirectly in the interest of an employer in relation to an employee[.]” In addition to his or her employer, an employee may have one or more joint employers, which is an individual or entity who is jointly and severally liable with the employer for the employee’s wages.

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The DOL recognizes two potential scenarios where an employee may have one or more joint employers:

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The final rule does not substantively change the second scenario: employers disassociated with respect to the employee’s employment may disregard work the employee performs for the other employer. If they share the employee’s services or share control of the employee, for example, they might be joint employers, requiring them to aggregate hours worked to determine FLSA liability.

The first scenario, however, changed dramatically with the adoption of a four-factor balancing test to determine if a second employer is considered a joint employer, analyzing whether the employer:

The analysis continues to be a fact-specific inquiry, with no one factor being determinative. Additional factors that demonstrate the exercise of significant control over the terms and conditions of the employee’s work may also be relevant, but the final rule also identifies certain factors that are not relevant to this determination (e.g., whether the employee is economically dependent on the potential joint employer, the existence of a franchise or brand and supply agreement, quality control agreements, sample handbooks and policies, and association health or retirement plans). The final rule also provides examples of how to apply the joint employer guidance in a variety of circumstances.

The rule becomes effective March 16, 2020. It is important to note, however, that although the rule will govern DOL enforcement going forward, it is not binding on courts. It is expected that the plaintiffs’ bar and worker advocacy groups will mount direct and indirect legal challenges to the rule in the months ahead. As with many other employment regulations, the outcome of the 2020 presidential election may also impact the joint employer landscape.

Bryan Stillwagon 404.407.3668 <a href="mailto:Bryan.Stillwagon@ThompsonHine.com">Bryan.Stillwagon@ThompsonHine.com</a>

Anthony P. McNamara 513.352.6657 <a href="mailto:Anthony.McNamara@ThompsonHine.com">Anthony.McNamara@ThompsonHine.com</a>

or any member of our <a href="http://www.thompsonhine.com/services/labor-amp-employment">Labor &amp; Employment</a> group.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel. This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2022/04/Labor__Employment_@lert_-_DOL_Finalizes_Rule_Redefining_Joint_Employer_Status.pdf

DOL Finalizes Rule Redefining Joint Employer Status

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