The recent DOL Administrator’s Interpretation on “Joint Employment”, shared by Mike Scheerer, Senior HR Consultant, HR Solutions.
Not to be outdone by the National Labor Relations Board (“NLRB”) and its recent Browning-Ferris decision where it significantly expanded the definition of “joint employment” under the National Labor Relations Act, the United States Department of Labor (DOL) Wage and Hour Division released an Administrator’s Interpretation this week similarly putting employers on notice that it’s view of joint employment under the Fair Labor Standards Act (FLSA), as well as the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), is going to significantly expand. The joint employment analysis will be applied for purposes of determining whether one or more entities are liable for compliance with the FLSA and the MSPA, primarily overtime obligations. The 20-page Administrator’s Interpretation, while long, it is not a particularly difficult read and might be useful as a given section applies to your business.
In essence, the DOL identifies joint employment along both vertical and horizontal planes. The horizontal joint employment scenario arises where an employee works for two legally separate but jointly controlled employers. This analysis looks at the employers and whether they are affiliates or jointly controlled. (See Page 8 of the Interpretation). In the vertical joint employment analysis, the Department articulates a number of factors it will consider in evaluating the relationship of the employee to the respective potential “employers”, such as in a subcontractor situation or a farmworker working for a farm labor contractor. (See Page 11 of the Interpretation). The DOL makes it clear that it will continue to apply the “economic realities” analysis to see if there is an employment relationship, not the common law control analysis which may apply in other situations.
In this climate where the regulatory agencies are doing all they can to classify workers as employees or joint employees rather than independent contractors, it is critical that employers review contracts with contractors and staffing companies and enact policies or operational guidelines for supervisors to make sure that they do not convert what might otherwise be an independent contractor relationship is inadvertently converted into an employment relationship. This is complicated as the DOL test for “joint employment” is different than the test applied under the National Labor Relations Act, Occupational Safety and Health Administration (OSHA), Pennsylvania Unemployment Compensation law, etc. Needless to say, FLSA violations are fertile ground for DOL investigations and class action lawsuits often resulting in significant overtime obligations.
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