DOL proposes new ‘joint employer’ rule

The U.S. Department of Labor has proposed a rule revising and clarifying the responsibilities of employers in joint-employer arrangements that features a new four-factor test for determining joint-employer status.

The inquiry under the proposed rule focuses on whether the alleged joint employer actually exercises the power to: (1) hire or fire the employee; (2) supervise and control the employee’s work schedules or conditions of employment; (3) determine the employee’s rate and method of payment; and (4) maintain the employee’s employment records.

The proposal also includes a set of examples designed to further clarify joint-employer status.

One example looks at an individual who works 30 hours per week as a cook at one restaurant, and 15 hours per week as a cook at a different restaurant affiliated with the same nationwide franchise. Both establishments are locally owned and managed by different franchisees that do not coordinate “in any way” their management of the employee.

Under that scenario, the proposal concludes they are not joint employers of the cook, because “they are not associated in any meaningful way with respect to the cook’s employment.”

The rule adds that the “similarity of the cook’s work at each restaurant, and the fact that both restaurants are part of the same nationwide franchise, are not relevant to the joint employer analysis, because those facts have no bearing on the question whether the restaurants are acting directly or indirectly in each other’s interest in relation to the cook.”

If adopted, the rule would mark the first major revision of the DOL’s joint employer regulation, 29 C.F.R. Part 791, since 1958.

The Fair Labor Standards Act allows joint-employer arrangements under which an employer and a joint employer are jointly responsible for the employee’s wages.

In 2017, the DOL withdrew the Obama administration’s guidance interpreting joint-employer status more broadly.

The notice of proposed rulemaking was published in the Federal Register on April 9. The department is accepting comments on the proposal until June 10, 2019.

In September, a divided National Labor Relations Board proposed a new rule that also raised the bar for establishing joint-employer status. The NLRB’s proposed rule change similarly seeks to reverse one of the board’s more controversial pro-labor decisions issued when it was controlled by appointees of President Obama.