On April 1, 2019, the Department of Labor (DOL) announced a proposed rule to clarify whether companies are considered joint employers where they share control over workers in the businesses. Currently, under the Fair Labor Standards Act (FLSA), to be considered a joint employer a business (user employer) must exercise direct operational and supervisory control over another businesses employee. In those situations both companies will be jointly responsible for the employee’s wages. The most common situations where a joint employer situation may arise are with franchise owners and businesses that work with temporary staffing agencies to supplement their workforce.
The proposed rule creates a four factor 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 proposed rule would ensure that employers and user employers clearly understand their responsibilities related to paying employees at least the federal minimum wage for all hours worked and overtime for all hours worked over 40 in a workweek.
The Notice of Proposed Rulemaking was published on April 9, 2019, in the Federal Register and interested parties have until June 10, 2019 to submit comments on the DOL’s proposed rulemaking. If you have questions concerning the DOL’s newly proposed rule, please feel free to contact one of our wage and hour attorneys by calling (501) 371-9999.