DOL Releases Final Rule on Joint Employers

On January 12th the U.S. Department of Labor (DOL) released revised regulations and guidance regarding the determination of joint employer status under the Fair Labor Standards Act (FLSA).

Joint employment is when two or more entities share control and supervision of an employee’s activity. The entities are thus jointly responsible, both together and individually, for compliance with federal regulations.

The new rule provides a four-factor test for determining shared liability for FLSA-related wage and hour violations. The DOL will now consider whether an entity:

• Determines employees’ rate and method of payment
• Hires and fires employees
• Maintains employment records
• Supervises and controls employees’ work schedules or conditions of employment to a substantial degree

 It is not uncommon for education entity employees to work for more than one employer. In some cases, this may result in a joint employment relationship between the education entity and the other employer.

Examples

1. One education entity acts as the fiscal agent for the special education co-op and handles the administrative operations. The employees are treated as a pool of workers for all entities in the co-op. Therefore, the entity acting as the fiscal agent and the entity where the employee performs the work are joint employers.
2. An education entity outsources functions such as transportation, food service, and custodial services. Workers in these areas are hired by a intermediary agency, work exclusively for the district, and are supervised by an employee of the educational entity.

Next Steps

While the final rule doesn’t take effect until March 16, 2020, HR departments may wish to revisit vendor contracts now and speak with local counsel to gauge risk. An FAQ is available on the DOL website and the final rules include examples illustrating how to apply the new rules for various scenarios.