JENNIFER A. MANCERA | NOLAND HAMERLY ETIENNE & HOSS AGRICULTURE & THE LAW
Joint Employers Under the FLSA In January 2020, the U.S. Department of Labor (DOL) released its Final Rule on the often-litigated joint employer issue under the Fair Labor Standards Act (FLSA), which took effect on March 16, 2020. Prior to the publication of the Final Rule, the Fair Labor Standards Act’s (“FLSA”) joint-employer standard had not been substantively changed in over 60 years. Under the FLSA, an “employer” is “any person acting
appropriate weight to give each factor will vary depending on the circumstances but no single factor is determinative of joint employer status. The Final Rule further clarifies that to be a joint employer under the FLSA, a second employer must actually exercise— directly or indirectly—one or more of the four control factors. The reserved right to exercise this control may in some instances be relevant for determining joint-employer status, but such a reserved right, if not actually utilized, will not, without other factors, establish a joint-employer relationship. Factors Not Relevant The Final Rule contains other important points and identifies factors that are not relevant to the determination of FLSA joint employer status. For example, the Final Rule specifies that whether the employee is economically dependent on the potential joint employer, including factors used to establish whether a particular worker is a bona fide independent contractor, are not relevant to determine joint employer liability. Other factors that do not make joint employer status more or less likely under the Act, include: • the potential joint employer’s contractual agreements with the employer requiring the employer to comply with its legal obligations; • the potential joint employer’s contractual agreements with the employer including those requiring the potential joint employer to: – satisfy certain health and safety standards or requirements; – provide training; or – implement quality control standards to ensure the consistent quality of the work product, brand, or business reputation; • the potential joint employer’s practice of providing the employer with a sample employee handbook, or other forms, or allowing the employer to operate a business on its premises (including “store within a store” arrangements); • The employee’s “economic dependence” on the potential
directly or indirectly in the interest of an employer in relation to an employee;” a joint employer is any additional “person” (i.e., an individual or entity) who is jointly and severally liable with the employer for the employee’s wages. Consistent with the FLSA’s broad definitions and scope of coverage, the DOL’s regulations specifically recognize that two or more employers may jointly employ one employee, and generally require employers to comply with their legal responsibilities under the FLSA. Where an employee performs work for the employer that simultaneously benefits another individual or entity, the Final Rule adopts a four-factor balancing test to determine whether the potential joint employer is directly or indirectly controlling the employee. Four-Factor Balancing Test The DOL’s Final Rule lays out a four-factor balancing test, derived from the Ninth Circuit test articulated in Bonnette v. California Health & Welfare Agency (9th Cir. 1983), to evaluate employer-like behavior. The four-factor balancing test assesses whether the potential joint employer: 1. Hires or fires the employee; 2. Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; 3. Determines the employee’s rate and method of payment; and 4. Maintains the employee’s employment records. “Employment records” are the types of records that evidence the potential employer’s activities in the other three factors, such as maintaining payroll records. According to the DOL, additional factors may also be relevant in determining whether another person is a joint employer, “but only if they indicate whether the potential joint employer is exercising significant control over the terms and conditions of the employee’s work.”Whether a person is a joint employer will depend on all the facts in the case, and the
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SEPTEMBER | OCTOBER 2020
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