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Labor Department Finalizes Joint Employer Rule


The Labor Department has released a final version of the joint employer rule, which makes it more difficult for businesses to be held liable when their franchisees or contractors violate the Fair Labor Standards Act.

Under this finalized joint employer rule, set to take effect on March 16, a four part test is used to determine whether a business is jointly liable for minimum wage and overtime violations.  This four part test weighs whether the business, with regard to its franchisee or contractor, maintains the power to hire and fire; to supervise schedules and 'conditions of employment'; to set pay; and to keep employment records.  Notably, businesses will not be considered joint employers by virtue of their business model alone.  As a result, franchisors will not be considered joint employers just because they are franchisors.

Now bear in mind, the National Labor Relations Board ("NLRB") is expected to finalize a similar rule that clarifies when a business should be classified as a joint employer as to collective bargaining and unfair labor practice charges.  As well, the Equal Employment Opportunity Commission ("EEOC") is also expected to finalize a rule that clarifies when a business should be classified as a joint employer under federal employment discrimination laws.


For additional information:  https://news.bloomberglaw.com/daily-labor-report/trump-cements-rule-to-limit-companies-joint-employer-liability

For a copy of the finalized rule:  https://aboutblaw.com/N6d

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