{"id":3925,"date":"2020-01-16T14:19:24","date_gmt":"2020-01-16T19:19:24","guid":{"rendered":"http:\/\/employerdefensereport.com\/?p=3925"},"modified":"2026-03-18T14:46:30","modified_gmt":"2026-03-18T18:46:30","slug":"dol-releases-final-rule-for-determining-joint-employer-status","status":"publish","type":"post","link":"https:\/\/www.connmaciel.com\/employer-defense-report\/dol-releases-final-rule-for-determining-joint-employer-status\/","title":{"rendered":"DOL Releases Final Rule for Determining Joint Employer Status"},"content":{"rendered":"

\"DepartmentEarlier this week, on January 12, 2020, the U.S. Department of Labor (DOL) announced<\/a> the release of its final rule revising and updating its regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA).\u00a0 According to DOL, \u201cThe final rule provides updated guidance for determining joint employer status when an employee performs work for his or her employer that simultaneously benefits another individual or entity, including guidance on the identification of certain factors that are not relevant when determining joint employer status.\u201d\u00a0 The DOL published its <\/span>Notice of Proposed Rulemaking<\/a> (NPRM) on April 9, 2019, and received over 12,000 comments within the 30-day comment period.\u00a0 The final rule becomes effective on March 16, 2020, 60 days after <\/span>publication<\/a> in the Federal Register today, January 16, 2020.<\/span><\/p>\n

As a threshold matter, under the FLSA, an employee working for one company may be found to be the joint employee of a second, independent company, depending on the nature and extent of control over the employee\u2019s work.\u00a0 Joint employer status is important for numerous reasons, including the fact that a joint employer can be held joint and severally liable for FLSA wage and hour obligations.\u00a0 In 1958, DOL published an interpretive regulation, 29 C.F.R. \u00a7 791, explaining that joint employer status depends on whether multiple persons are \u201cnot completely disassociated\u201d or \u201cacting entirely independently of each other\u201d with respect to the employee\u2019s employment.\u00a0<\/span><\/p>\n

Specifically, the regulation provided three situations where two or more employers are generally considered joint employers: (1) where there is an arrangement between the employers to share the employee\u2019s services (e.g., to interchange employees); (2) where one employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or (3) where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.\u00a0 The DOL issued its NPRM out of concern that part 791 did not provide enough guidance for the most common joint employer scenario under the FLSA \u2013 where an employer suffers, permits, or otherwise employs an employee to work, and another person simultaneously benefits from that work. \u00a0In that scenario, the employer and the other person are almost never \u201ccompletely disassociated,\u201d and the real question is not whether they are associated but whether the other person’s actions in relation to the employee merit joint and several liability under the Act. \u00a0Until this final rule, DOL had not meaningfully updated the regulation since its promulgation over 60 years ago.<\/p>\n

The final rule recognizes two scenarios under which an employee can be considered to have more than one employer:<\/p>\n

    \n
  1. An individual is employed by one entity and a second entity benefits from that work; and<\/li>\n
  2. An employer employs an individual for one set of hours during a work week and a second employer employs the same individual for a second set of hours during the same work week.<\/li>\n<\/ol>\n

    Focusing largely on the first scenario, the rule directs courts to use a four-part balancing test derived from a Ninth Circuit case, Bonnette v. California Health & Welfare Agency<\/em>, to decide whether two linked businesses jointly employ a group of workers. \u00a0The test weighs whether the business, with regard to its franchisee or contractor, maintains the power:<\/p>\n

      \n
    1. To hire or fire the employee;<\/li>\n
    2. To supervise and control the employee\u2019s work schedule or conditions of employment to a substantial degree;<\/li>\n
    3. To determine the employee\u2019s rate and method of payment; and<\/li>\n
    4. To maintain the employee\u2019s employment records.<\/li>\n<\/ol>\n

      According to DOL, \u201cNo single factor is dispositive in determining joint employer status, and the appropriate weight to give each factor will vary depending on the circumstances. However, satisfaction of the maintenance of employment records factor alone does not demonstrate joint employer status.\u201d<\/p>\n

      DOL\u2019s final rule provides guidance on how to apply this test.\u00a0 It specifies, for example, that to be a joint employer, the potential joint employer must actually exercise \u2013 directly or indirectly \u2013 one or more of the four control factors.\u00a0 It goes on further to state that the potential joint employer\u2019s person\u2019s \u201cability, power, or reserved right to act in relation to the employee may be relevant for determining joint employer status, but such ability, power, or right alone does not demonstrate joint employer status without some actual exercise of control.\u201d<\/p>\n

      The final rule also provides that, although the four factors should determine joint employer status in most cases, additional factors may be considered, but only if they indicate whether the potential joint employer exercises significant control over the terms and conditions of the employee\u2019s work.\u00a0 In no case, however, should an employee\u2019s economic dependence on the potential joint employer be considered for determining the potential joint employer\u2019s liability.\u00a0 Examples of factors that assess the employee\u2019s economic dependence and do not influence the joint employment analysis include:<\/p>\n

        \n
      1. Whether the employee is in a specialty job or a job that otherwise requires special skill, initiative, judgment, or foresight;<\/li>\n
      2. Whether the employee has the opportunity for profit or loss based on his or her managerial skill;<\/li>\n
      3. Whether the employee invests in equipment or materials required for work or the employment of helpers; and<\/li>\n
      4. The number of contractual relationships, other than with the employer, that the potential joint employer has entered into to receive similar services.<\/li>\n<\/ol>\n

        Additionally, the final rule specifies that an employer\u2019s franchisor, brand and supply, or similar business model and certain contractual agreements or business practices do not make joint employer status under the FLSA more or less likely.<\/p>\n

        In addressing the other joint employer scenario under the FLSA \u2013 where multiple employers suffer, permit, or otherwise employ the employee to work separate sets of hours in the same workweek \u2013 the final rule provides that the multiple employers are joint employers if they are sufficiently associated with respect to the employment of the employee.\u00a0 If the multiple employers are joint employers, they must aggregate the hours worked for each for purposes of determining compliance with the FLSA.\u00a0 Finally, the final rule provides several examples applying DOL\u2019s guidance for determining FLSA joint employer status in a variety of different factual situations.<\/p>\n

        Although the final rule is generally considered a win for the business community, employers assessing their joint employer status are advised to consult with counsel.\u00a0 This is especially important in light of the fact that the National Labor Relations Board is expected to release a final rule setting forth standards for joint-employer status under the National Labor Relations Act shortly and the Equal Employment Opportunity Commission has indicated its plan to release a proposed joint-employer rule in the months to come. \u00a0If you have any questions, please contact one of our labor and employment attorneys<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Earlier this week, on January 12, 2020, the U.S. Department of Labor (DOL) announced the release of its final rule revising and updating its regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA).\u00a0 According…<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_tribe_ticket_capacity":"","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[813],"tags":[909,825],"class_list":["post-3925","post","type-post","status-publish","format-standard","hentry","category-wage-hour-compliance","tag-agency-investigations-audits","tag-employee-classification-exempt-vs-non-exempt"],"acf":[],"yoast_head":"\nDOL Releases Final Rule for Determining Joint Employer Status - Employer Defense Report<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.connmaciel.com\/employer-defense-report\/dol-releases-final-rule-for-determining-joint-employer-status\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DOL Releases Final Rule for Determining Joint Employer Status - Employer Defense Report\" \/>\n<meta property=\"og:description\" content=\"Earlier this week, on January 12, 2020, the U.S. Department of Labor (DOL) announced the release of its final rule revising and updating its regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA).\u00a0 According…\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.connmaciel.com\/employer-defense-report\/dol-releases-final-rule-for-determining-joint-employer-status\/\" \/>\n<meta property=\"og:site_name\" content=\"Employer Defense Report\" \/>\n<meta property=\"article:published_time\" content=\"2020-01-16T19:19:24+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-03-18T18:46:30+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.connmaciel.com\/employer-defense-report\/wp-content\/uploads\/sites\/2\/2015\/12\/department-of-labor.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"225\" \/>\n\t<meta property=\"og:image:height\" content=\"225\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Beeta B. 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