In March 2020, the Department of Labor (DOL) issued a joint employer rule, which has been in part, struck down by the federal court. In its ruling, the federal court noted that the joint employer testing standard is in conflict with the basis of the Fair Labor Standards Act (FLSA) and failed to justify or account for the cost of workers.
The joint employer rule sets two tests to determine the type of joint employment that exists between two employers—either horizontal or vertical. As noted in the attached HR Compliance Bulletin, the court noted in their decision that the joint employer rule pertaining to a vertical employment relationship test was too narrow and inconsistent with the FLSA’s term of “employ” as “to suffer and permit to work.” Even though the judge noted that it is often permissible for a federal agency to alter their position on an issue, the DOL failed to make the argument as to need to adjust the definition as included in the joint employer rule.
Contact your Cowden representative for more information on this or other compliance issues.