The Labor Department’s recent proposed joint employer rule is welcome news for the PEO industry. That being said, you’ve received similar welcome news every other time the DOL went through this same exercise in the past, only to see the helpful guidance unwound by a new administration. Watching the joint employer rule evolve is like watching a very slow and long tennis match with a volley returned every four years. But while we have the benefit of a helpful rule, PEOs should incorporate the guidance into their risk management strategy. Here’s a recap and a review of the four things all PEOs should know.

Quick Recap of New Joint Employer Proposal

The DOL’s Wage and Hour Division released a proposal last month outlining a four-factor test to determine when two businesses are liable as joint employers under the FLSA, FMLA, and MSPA. With no single factor being dispositive, the test considers whether:

• a business hires or fires the employee;
• supervises and controls their work schedule or conditions of employment to a substantial degree;
• determines their rate and method of payment; and
• maintains their employment records.

The proposal largely mirrors a 2020 Trump administration rule that was subsequently blocked by a court and later rescinded under Biden, though this version places greater emphasis on actual control over merely reserved control which is helpful for the PEO industry. You can read our full recap of the prior rule here.

Top 4 Things PEO Leaders Need to Know

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