Labor Department Proposes New Rules on Joint Employment

The U.S. Department of Labor on April 1 released a Notice of Proposed Rulemaking (NPRM) to provide a definition of “joint employment” in the Fair Labor Standards Act (FLSA). NATSO is reviewing the proposal and will issue a more in-depth analysis in coming days. However an initial look seems to indicate that the proposed rule will be positive for NATSO members.

The DOL has proposed a four-factor test for determining joint employment under the FLSA. The DOL will consider whether the potential joint employer actually exercises the power to:

• hire or fire the employee;
• supervise and control the employee’s work schedules or conditions of employment;
• determine the employee’s rate and method of payment; and
• maintain the employee’s employment records.

This four-part test originates from the 1983 Ninth Circuit decision in Bonnette v. California Health and Welfare Agency, which also served as the basis for the language in the House-passed Save Local Business Act from last Congress.

Public comments on the joint employment NPRM likely will be due in 60 days (around June 1) following publication of the proposal in the Federal Register later this week. The proposal also includes a set of examples for comment that would further help clarify joint employer status.

The DOL is just one governmental entity reexamining the joint employer standard, and the uncertainty surrounding this body of law is causing tremendous uncertainty and complexity for employers throughout the country. From different state laws, to the U.S. Equal Employment Opportunity Commission, DOL and the National Labor Relations Board (NLRB), each of these bodies and jurisdictions refer to the joint employer doctrine to determine employer liability.  Because they each have different rules as to what establishes joint employment, the employer community is uncertain as to which body of rules to follow in developing its own compliance controls.  

NATSO on Jan. 28 submitted formal comments to the NLRB as part of the NLRB's reexamination of the "joint employer" standard. NATSO's testimony supported the NLRB's reexamination of the joint employer standard, which was revised during the Obama Administration to expand the scope of determining "co-employment" under the National Labor Relations Act.  

The joint employer standard is used to determine when two or more employers share responsibility for the essential terms and conditions of employment over a group of employees. Joint employers are required to negotiate with a union representing those employees and are liable for any violations of the National Labor Relations Act committed by either employer.