October 04, 2021 Rescission of Joint Employer Rule
KEEPING YOU INFORMED…
Effective October 5, 2021, the U.S. Department of Labor’s joint employer rule (“the Rule”), adopted by the prior administration, will be rescinded. The Rule included, among other things, a four-factor test that narrowly interpreted the definition of a “joint employer” pursuant to the Fair Labor Standards Act (“the FLSA”).
Courts will return to the use of various, and sometimes inconsistent, multi-factor tests to determine “joint employer status.” An employer’s status will depend on, among other things, the extent of control and supervision that it exercises over the employee(s) in question. Therefore, staffing firms, subcontractors, franchisees or other affiliated companies that were not considered joint employers pursuant to the Rule, could be considered joint employers after the Rule’s rescission. If two companies are considered joint employers, both are liable for minimum wages and overtime pay pursuant to the FLSA.
As a result, if you have ever been considered a joint employer, or if you believe that you might now be, you should reach out to us as soon as possible so that we can help you evaluate what steps to take. In particular, to avoid potential FLSA wage and hour issues, employers that do not solely and directly employ a portion of their workforce should speak with us about whether they will prospectively be considered a joint employer of some or all of their workers.
If you have any questions regarding how, if at all, the rescission of the Rule will affect your workplace, please contact Alyssa L. Zuckerman, Adam S. Ross or one of our other attorneys at 631-694-2300.
THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF THE CURRENT LAW. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.
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