On January 12, the U.S. Department of Labor (DOL) released a final rule on the joint employer standard, clarifying the employee status when a worker is employed by more than one company. The guidance, or framework, had been requested by franchisees and businesses that employ contract workers like staffing or construction companies.
In the final rule, effective March 16, the DOL:
- specifies that when an employee performs work for the employer that simultaneously benefits another person, that person will be considered a joint employer when that person is acting directly or indirectly in the interest of the employer in relation to the employee;
- provides a four-factor balancing test to determine when a person is acting directly or indirectly in the interest of an employer in relation to the employee;
- clarifies that an employee’s “economic dependence” on a potential joint employer does not determine whether it is a joint employer under the Fair Labor Standard Act (FLSA);
- specifies that an employer’s franchisor, brand and supply, or similar business model and certain contractual agreements or business practices do not make joint employer status under the FLSA more or less likely; and
- provides several examples applying the department’s guidance for determining FLSA joint employer status in a variety of different factual situations.
The final rule was published January 16 in the Federal Register.
Commentary from the Small Business and Entrepreneurship Council, whose audience this greatly impacts, notes that this rule “restores and refines a common-sense standard for small business owners who work with other entrepreneurs to more effectively build and scale their respective firms.”
Resource: Greg Ellis at (317) 264-6881 or email: gellis@indianachamber.com
