The U.S. Department of Labor (DOL) recently announced a new four-factor balancing test to determine whether two or more organizations should be considered “joint employers” under the Fair Labor Standards Act (FLSA). The final rule establishing the new test becomes effective March 16, 2020.
Joint employment, or co-employment, situations arise when two or more organizations share the control and supervision of one or more employees.
The DOL holds joint employers equally and individually responsible for compliance with labor and employment laws. The DOL looks at joint employment situations to prevent scenarios where one organization avoids complying with labor standards by using another employer as a “shield.”
The New Test
The final rule requires the DOL to examine whether a potential joint employer:
- - Hires or fires the employee;
- - Supervises and controls the 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.
Please note that this final rule and new test apply only to joint employment status for FLSA compliance and do not address joint employment status under other federal employment laws.
Speak with Barrow Group to learn more about these and other employer responsibilities.