Final joint-employer rule limits your company’s liability – UPDATED
UPDATE: The National Labor Relations Board has announced the final rule will take effect April 27.
Good news for employers everywhere: You’re now less likely to end up on the hook for another business’ compliance missteps. The Department of Labor (DOL) just released the final version of the joint-employer rule. And it’s effective March 16, 2020.
This topic has been the subject of much guidance from the DOL in the past and a source of confusion for many of your peers.
That’s because in many cases, it’s difficult to determine whether two employers who each may have some amount of control over an employee should be considered joint employers.
The Fair Labor Standards Act (FLSA) allows for a joint-employer relationship, but doesn’t offer much guidance about whether it’s applicable in various situations.
But the revised rule seeks to change that.
Here’s what you need to know about the final joint-employer rule.
Joint-employer rule offers a new test
When determining whether there’s a joint-employer relationship, it doesn’t all come down to economic dependence. Instead the DOL has created a new gauge.
The “four-factor balancing test” takes into account who:
- 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.
These elements directly relate to how the FLSA defines an employer, which is “any person acting directly or indirectly in the interest of an employer in relation to an employee.”
Other factors could be considered when evaluating joint-employer status, but only if they’re:
- relevant to whether the employer has significant control over the terms and conditions of the worker’s job, or
- performed either directly or indirectly in the employer’s interest, relating to the worker.
You and your team may not be able to answer all these questions set out by the new joint-employer rule on your own, so you’ll want to be prepared to work with other departments and supervisors.
Free Training & Resources
Webinars
Provided by Insightsoftware
Webinars
Provided by Yooz
Further Reading
An Oregon restaurant recently learned a costly lesson about overtime and tip pool rules after a federal investigation found it had shortcha...
You can’t just sit on forfeited retirement plan funds. But what options do you have? IRS has proposed regulations that’ll provi...
A federal court found a worker had been misclassified and identified more than 800 hours of potential overtime. But the Fifth Circuit still...
IRS has updated Form 5300, and that’s good news for sponsors of retirement plans wanting to ensure their plans’ tax benefits. ...
Year-end may seem a long way off, but some changes related to Form W-2 may require your attention now. For example, the Social Security...
The U.S. Supreme Court has reached a decision in the case of a highly compensated employee who sued his employer for unpaid overtime. I...