DOL issues final rule on joint employer status

The Department of Labor yesterday released a final rule updating and clarifying how it interprets joint employer status under the Fair Labor Standards Act, which aims to promote certainty for employers and employees, reduce litigation and encourage innovation in the economy. The first major update to DOL’s joint employer guidelines since 1958, the final rule provides a four-factor 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 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 potential joint employer’s maintenance of the employee’s employment records alone will not lead to a finding of joint employer status. The final rule also clarifies factors that are not relevant to determining joint employer status. The rule takes effect 60 days after its publication in the Jan. 16 Federal Register.