Joint Employer Rule becomes effective on March 16, 2020, narrowing the joint employer definition.
On April 1, 2019 the DOL Wage-Hour Division (WHD) published in the Federal Register proposed changes to the joint employer rule. On January 12, 2020, the Department of Labor (DOL) finalized the “Joint Employer” rule. It becomes effective on March 16, 2020, and is almost identical to the proposed rule. The new rule should substantially narrow the joint employer definition, and identify the circumstances under which two parties will be considered joint employers.
Under the new rule, a person or entity will be considered a joint employer if that person or entity “is acting directly or indirectly in the interest of an employer in relation to the employee.” To assist in determining whether a person or entity meets this requirement, the DOL will impose the following four-factor test. Meeting all four factors does not have to be satisfied for an entity to be deemed a joint employer. The weight given to each factor will vary depending on the circumstances and may need to undergo a legal review.
The following are the four factors:
- Does the person or entity hire or fire the employee?
- Does the person or entity supervise and control the employee's work schedule or conditions of employment?
- Does the person or entity determine the employee's rate and method of pay?
- Does the person or entity maintain the employee's employment records?
What has changed?
• Supervising or controlling an employee’s conditions of employment will no longer necessarily mean that party is a joint employer.
• Exercise of control for at least one of the above factors will be required to be considered a joint employer.
• Maintaining the employee’s employment records will no longer be enough, by itself, to make the entity a joint employer.