DOL Finalizes Update on Joint Employer Status Under the FLSA

The U.S. Department of Labor (USDOL) recently published a final rule revising its regulations under the Fair Labor Standards Act (FLSA) providing guidance on determining joint employer status. Effective March 16, 2020, the rule:

  • 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, and when the potential joint employer may:
    • hire or fire the employee
    • supervise and control employee’s schedule or conditions of employment to a substantial degree
    • determine employee’s rate and method of pay
    • maintain employee’s employment records
  • clarifies that an employee’s “economic dependence” on a potential joint employer does not determine whether it is a joint employer under the FLSA; 
  • specifies that an employer’s business model, certain contractual agreements or business practices do not make joint employer status under the FLSA more or less likely.

For further discussion, see the USDOL Fact Sheet, or see the Final Rule.