On January 13, 2020, the Department of Labor (DOL) issued its final Joint Employer Rule, which sets out a four-part test to determine whether businesses may be deemed “joint employers” of another company’s employees. Joint employers may be held fully liable for obligations owed to their employees under the Fair Labor Standards Act (FLSA). The final rule was a victory for WLF, which last June filed formal comments urging DOL to adopt a narrow definition of “joint employer.” The FLSA authorizes “joint employer” findings only in very limited circumstances: when a company possesses “substantial control over the terms and conditions of work” by another company’s employees. Following the new rule, a company is not a joint employer simply because it exercises some oversight over another company’s employees. Rather, the new test looks to whether the business makes important employment decisions (e.g., hours worked, pay rates, and hiring/firing decisions). DOL’s rulemaking provides vital clarity to businesses by rolling back heavy-handed regulations from previous administrations. The final rule is set to take effect on March 16, 2020.
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