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DOL Adopts New Joint Employer Determination Test

On January 12, 2020, the Department of Labor (DOL) announced new guidance under the Fair Labor Standards Act (FLSA) to determine whether two or more organizations should be considered “joint employers.” Under the joint employer classification, an employee may have, in addition to his or her employer, one or more joint employers—additional individuals or entities that are jointly, as well as separately, liable for the employee’s welfare and needs. This arrangement is often beneficial to employers as they can reduce the cost of labor compensation and employee benefits by having multiple employers splitting payroll and benefits costs.

The new testing parameters become effective March 16, 2020 and evaluate if the employer:

  • Hires or fires an employee;
  • Supervises and controls an employee’s work schedule or conditions of employment to a substantial degree;
  • Determines the employee’s rate and method of payment; and
  • Maintains the employee’s employment records.

The DOL states that there can be other qualifying factors to consider, but outlines that the above four parameters are the core parameters of an evaluation.

Employers looking to qualify as a joint employer or current joint employers looking to avoid violations of these rules, are encouraged to become familiar with the new guidance and evaluate their current status and ensure they are actually in a joint employment situation. The guidance also helps the employer in determining if there are any potential areas of non-compliance to the new rule and to ensure corrective actions are taken prior to March 16, 2020.

Read the Legal Update.

Contact your Cowden representative for more information on this or other compliance issues.