The U.S. Department of Labor issued a proposed rule to articulate the analysis DOL will employ in investigations and enforcement proceedings when determining whether two or more entities are joint employers under federal wage and hour laws.
The proposed rule’s most helpful clarification is the standard for so-called “vertical” joint employment, which can arise in contractor and subcontractor relationships. DOL proposes a four factor test, asking 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.
If all four factors are satisfied, there is a “substantial likelihood” of joint employment.
The proposal also states that certain common business practices, such as operating as a franchisor or requiring legal compliance, do not, by themselves, determine joint employment.
DOL would apply the same approach under the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act.