The U.S. Department of Labor on Jan. 13 announced a final rule to update the regulations interpreting joint employer status under the Fair Labor Standards Act.

Under the FLSA, an employee may have, in addition to his or her employer, one or more joint employers — additional individuals or entities that are jointly and severally liable with the employer for the employee’s wages. The FLSA requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek.

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

The department published a notice of proposed rulemaking in the Federal Register on April 9, 2019, and accepted comments on the proposal until June 10, 2019. The final rule is the first major revision of the joint employer regulation, 29 C.F.R. Part 791, since 1958.

In the final rule, the department provides a four-factor balancing test for determining FLSA joint employer status in situations where an employee performs work for one employer that simultaneously benefits another entity or individual. The balancing test examines whether the 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.

The rule also clarifies when additional factors may be relevant to a determination of FLSA joint employer status and identifies certain business models, contractual agreements with the employer, and business practices that do not make joint employer status more or less likely.

The department said the revisions were designed to add certainty regarding what business practices may result in joint employer status and to promote greater uniformity among court decisions by providing a clearer interpretation of FLSA joint employer status.

The final rule will be effective 60 days after its date of publication.

More information about the final rule is available here.