Wage and Hour Proposes New “Joint Employer” Rule

At a critical moment in the simmering battle over the definition of “joint employer,” the Department of Labor’s Wage and Hour Division has entered the fray with an emphatic statement.

W&H has issued a proposed new rule on the subject – its first since 1958 – which seeks to cut through a growing thicket of proposals and counter-proposals from a variety of sources, chiefly the NLRB.  The core principles of the new rule return the DOL’s definition to one that had been the dominant understanding for decades.  Under the new rule, joint employer status will be determined under a four-factor test.
 Who has the authority 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.

Since the Obama Administration’s attack on the pre-existing rules by elevating factors such as “indirect control” or “reserved rights,” there has been a concerted effort by employer groups to clarify the criteria by which “join employer” decisions will be made.  W&H has provided precisely the sought-for clarity by “explaining that ability, power, or reserved contractual right to act in relation to the employee is not relevant for determining joint employer status” and noting, further, that analyses of additional factors may be used to determine joint employer status, but only if “they are indicative of whether the potential joint employer is exercising significant control over the terms and conditions of the employee’s work.”