Earlier this year, the Department of Labor (DOL) updated its regulations under the Fair Labor Standards Act (FLSA) pertaining to the determination of joint employer status under the FLSA. A joint employer is any additional “person” (i.e., individual or entity) that is jointly and severally liable with the employer for the employee’s wages.
The DOL establishes a four-factor balancing test for determining joint employer status when a potential joint employer benefits from work by another employer’s employee(s). The balancing test is taken from the Ninth Circuit’s 1983 ruling in Bonnette v. California Health & Welfare Agency, and assesses 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.
- Operating as a franchisor or entering into a brand and supply agreement, or using a similar business model;
- The potential joint employer’s contractual agreements with the employer requiring the employer to comply with its legal obligations or to meet certain standards to protect the health or safety of its employees or the public;
- The potential joint employer’s contractual agreements with the employer requiring quality control standards to ensure the consistent quality of the work product, brand, or business reputation; and
- The potential joint employer’s practice of providing the employer with a sample employee handbook, or other forms, allowing the employer to operate a business on its premises (including “store within a store” arrangements), offering an association health plan or association retirement plan to the employer or participating in such a plan with the employer, jointly participating in an apprenticeship program with the employer, or any other similar business practice.
