On January 20, 2016, the U.S. Department of Labor’s (DOL) Wage and Hour Division issued a new interpretation on joint employment under the Fair Labor Standards Act (FLSA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA).
The interpretation “identifies common scenarios in which two or more employers jointly employ an employee and are thus jointly liable for compliance,” and states that it is intended to “provide comprehensive guidance . . . so that employers can properly analyze a potential joint employment scenario.” The interpretation goes on to explain how the DOL will analyze both “vertical” and “horizontal” joint employment relationships.
There is no disputing that under the FLSA, an employee can have two or more employers for the work that he or she is performing. However, courts and employers have struggled with how to define when an entity is liable as a “joint employer.” Nevertheless, the interpretation takes the position that “the expansive definition of ‘employ’ [under the FLSA and MPSA] . . . ensures that the scope of employment relationships and joint employment under the FLSA and MSPA, is as broad as possible.”
The guidance is part of larger push by the Federal Government to increase employee protections and hold employers liable for violations of wage and hour laws. Last July, the DOL issued an interpretation concluding “most workers are employees under the FLSA’s broad definitions” when discussing independent contractors under the FLSA. And, in August, the National Labor Relations Boardexpanded its standard for determining joint employment under the National Labor Relations Act in Browning-Ferris Industries.
The administrative guidance demonstrates how the DOL will consider joint employment relationships in its enforcement of these laws. Undeniably, the guidance, which specifically addresses the construction, agricultural, and hospitality industries, reveals that the DOL may use its interpretation of joint employment status to target smaller, less established companies for wage and hour violations, and seek “statutory coverage, financial recovery, and future compliance” from a “larger and more established” joint employer.
As a finding of joint employment can be significant–joint employer status can result in an employer being held responsible for wage and hour violations wholly committed by another employer–businesses are cautioned to closely evaluate their practices and consider if they can accomplish their goals while lowering risks associated with a finding of joint employer status. For more information contact:
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