Skip to main content
You have permission to edit this article.
Edit
Business viewpoint:Joint employer rule changes again after 18 months
0 Comments
BUSINESS VIEWPOINT

Business viewpoint:Joint employer rule changes again after 18 months

  • 0
{{featured_button_text}}

If you have watched the television series “The Morning Show” starring Jennifer Aniston and Reese Witherspoon, you may recall an early scene in which Witherspoon’s character — a small-town news reporter — covers a protest against a local coal mine’s re-opening.

When provoked by a protester, Witherspoon launches into a tirade against drastic swings in laws and regulations — swings driven by the shift of power back and forth between increasingly divided political parties. Witherspoon’s frustrated rant lamenting the human impact of see-saw policies reaches its crescendo when she screams out “It’s exhausting! I’m exhausted!”

With three presidential administrations in the past five years, HR professionals can probably relate with the urge to yell “It’s exhausting! I’m exhausted!”

On top of navigating COVID-19 challenges, HR professionals have the unenviable task of staying up-to-date with increasingly rapid fluctuations in labor and employment laws and regulations.

One of the Department of Labor’s latest announcements illustrates how difficult it can be to keep up with the changes.

The DOL’s Wage and Hour Division will rescind a rule known as the “Joint Employer Status Under the Fair Labor Standards Act” (commonly referred to as the “Joint Employer Rule”) on Sept. 28 of this year — a mere 18 months after it first took effect in March 2020.

The Joint Employer Rule speaks to the applicability of the Fair Labor Standards Act (“FLSA”) in certain employment situations in which more than one entity could potentially be deemed the employer of an employee.

Although the FLSA may seem simple on the surface, it has quite a few weeds to get lost in.

For example, it is possible for two separate companies to be considered the worker’s employer for the same work — meaning the companies are “joint employers.”

Joint employment issues commonly arise in situations involving a franchisor or a company that utilizes staffing agencies or subcontractors.

The FLSA defines “employer,” but it does not define “joint employer.” For this reason, the DOL must step in to provide guidance about how the FLSA should apply to multiparty employment arrangements, and it has historically done so by issuing administrative interpretations. The DOL did this in early 2020 by issuing the Joint Employer Rule.

The Joint Employer Rule provided a clearer standard to determine joint employment status and found support with groups such as trade associations and business advocacy organizations.

Generally, the Joint Employer Rule contained regulations making it more difficult to declare an entity to be a joint employer. This resulted in fewer workers receiving the FLSA’s minimum wage and overtime protections and led to opposition from labor unions, worker advocacy groups, and political figures now in a position to change the rule.

The joint employment analysis is critical to determining which companies will be subject to the FLSA — a determination of great significance to workers and employers alike.

After the Joint Employer Rule is rescinded, the analysis will return to the less precise patchwork of administrative interpretations in place before March 2020. But, if past experience is any indication, that won’t last for long.

Caroline G. Lindemuth and Randall J. Snapp are attorneys with Crowe & Dunlevy, and members of the Labor & Employment Practice Group.

0 Comments

Subscribe to Daily Headlines

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

The business news you need

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

Get up-to-the-minute news sent straight to your device.

Topics

Breaking News