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U.S. Department of Labor Issues Final Rule to Update FLSA's Joint Employer Regulations

    January 31, 2020

    The U.S. Department of Labor has updated the Fair Labor Standards Act (FLSA) Joint Employer Rule to provide clarity and promote uniformity in the interpretation and identification of joint employer status. In this final rule, the U.S. DOL provides a four-factor balancing test for determining joint employer status. The balancing test examines whether the potential joint employer:

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

    The final rule also clarifies when additional factors may be relevant to a determination of FLSA joint employer status, and identifies certain business models, contractual agreements with the employer, and business practices that do not make joint employer status more or less likely.

    The effective date of the final rule is March 16, 2020.