Department of Labor Revises Joint Employer Status Regulations
Effective March 16, 2020, the United States Department of Labor ("Department") has revised its regulations interpreting Joint Employer Status under the Fair Labor Standards Act ("FLSA"). Under the revised regulations, the Department stipulates that when an employee performs work for an employer that benefits another person simultaneously, the third person is a joint employer when such third person acts directly or indirectly in the interest of the employer relative to the employee. The Department provides a test for determining when a person acts directly or indirectly in the interest of the employer relative to the employee, which requires balancing four factors. The revised regulations further clarify that an employee's economic dependence on a potential joint employer is not a determining factor in defining a joint employer, and nor does an employer's franchisor, brand, supply, similar business model, or certain contractual agreements and business practices under the FLSA impact a determination of joint employer status. Specific examples illustrating the revised regulation in practice, and the text of the revised regulation, can be found here:https://www.federalregister.gov/documents/2020/01/16/2019-28343/joint-employer-status-under-the-fair-labor-standards-act.
The revised regulation enacts meaningful changes which may impact any business that relies on Independent Contractors or sub-contractors to operate their business or supplement their workforce. If you have questions about the impact of the new regulations on your business or employment, give us a call.