Situation Report | August 2, 2021
Last week, the U.S. Department of Labor (DOL) announced a final rule to rescind an earlier rule on “Joint Employer Status under the Fair Labor Standards Act” (FLSA) that took effect in March 2020.
According to DOL: “The rescinded rule included a description of joint employment contrary to statutory language and Congressional intent. The rule also failed to take into account the department’s prior joint employment guidance. The U.S. District Court for the Southern District of New York vacated most of the rule in 2020.”
Under the FLSA, an employee can have more than one employer for the work they perform. Joint employment applies when — for the purposes of minimum wage and overtime requirements — DOL considers two separate companies to be a worker’s employer for the same work. For example, a joint employer relationship could occur where a hotel contracts with a staffing agency to provide cleaning staff, which the hotel directly controls. If the agency and the hotel are joint employers, they are both responsible for worker protections.
In effect, the new DOL rule did away with the prior rule’s narrow definition of “joint employer.” The prior rule included a four-factor test that made it less likely for some entities to be deemed joint employers for purposes of the FLSA.
The final rule becomes effective September 28, 2021.
See here for more information about the FLSA and other laws it enforces; or call 1-866-4US-WAGE.