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DOL issues update on joint-employer relationship

Authored by Bukaty Companies on July 2, 2019

A lot has changed in the workplace since the Department of Labor issued its 1958 rule on joint-employer relationships under the Fair Labor Standards Act (FLSA). In April 2019, the DOL announced a proposed rule to clarify the responsibilities of employers and joint employers regarding minimum wage and overtime requirements.

As proposed, there are four factors that determine whether a potential joint-employer relationship exists.

  1. Who has hire and fire authority?
  2. Who has supervision and work schedule control?
  3. Who decides on a rate of pay and method of payment?
  4. Who stores employment-records?

The four-factor review provides greater certainty for employers and employees when determining who is a joint employer. Before the final rule is released, court challenges are expected by workers’-rights advocates. See DOL-provided examples of who is a joint employer in the section below.

Are you a joint employer?

After you read the DOL examples below, how would you rule on the status of a joint-employer relationship?

Example 1. An individual works 30 hours per week as a cook at one restaurant establishment, and 15 hours per week as a cook at a different restaurant establishment affiliated with the same nationwide franchise. These establishments are locally owned and managed by different franchisees that do not coordinate in any way with respect to the employee. Are they joint employers of the cook?

Application. Under these facts, the restaurant establishments are not joint employers of the cook because they are not associated in any meaningful way with respect to the cook’s employment. The similarity of the cook’s work at each restaurant, and the fact that both restaurants are part of the same nationwide franchise, are not relevant to the joint employer analysis, because those facts have no bearing on the question whether the restaurants are acting directly or indirectly in each other’s interest in relation to the cook.

Example 2. A country club contracts with a landscaping company to maintain its golf course. The contract does not give the country club authority to hire or fire the landscaping company’s employees or to supervise their work on the country club premises. However, in practice a club official oversees the work of employees of the landscaping company by sporadically assigning them tasks throughout each workweek, providing them with periodic instructions during each workday, and keeping intermittent records of their work. Moreover, at the country club’s direction, the landscaping company agrees to terminate an individual worker for failure to follow the club official’s instructions. Is the country club a joint employer of the landscaping employees?

Application. Under these facts, the country club is a joint employer of the landscaping employees because the club exercises sufficient control, both direct and indirect, over the terms and conditions of their employment. The country club directly supervises the landscaping employees’ work and determines their schedules on what amounts to a regular basis. This routine control is further established by the fact that the country club indirectly fired one of landscaping employees for not following its directions

Blog Category: Compliance