Businesses that utilize contractors or franchise out their brand may soon get some clarity about when those arrangements make them “joint employers” under federal minimum wage, family medical leave, and migrant worker laws. The US Department of Labor just released a proposal yesterday outlining its approach to joint employer liability under a trio of laws, setting up a test that will give companies greater flexibility and less risk when entering into business relationships. The proposed four-factor analysis focuses on the amount of control a business exercises over its contractors, franchisees, and other entities. Here’s everything you need to know about joint employer status from the DOL and how you can prepare for the potential new rule.
What Does the DOL Want to Do?
The Wage and Hour Division’s proposed rule will revisit the standard for determining whether multiple businesses are legally responsible for compliance with minimum wage and overtime pay, child labor limits, and other requirements under the Fair Labor Standards Act (FLSA). It also would apply to enforcement actions brought under the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).
The proposal largely mirrors the Trump administration’s 2020 rule, which was subsequently blocked by a court. It recognizes two forms of joint employment: vertical and horizontal.
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