U.S. Labor Department Issues Joint Employer Liability Rules

By | January 21, 2016

More U.S. companies could be classified as “joint employers” of workers employed by a staffing agency or contractor and held liable for labor violations tied to those staff, the U.S. Labor Department said in guidance published Wednesday.

Joint employment has emerged as a major issue in franchising, contracting, temporary staffing and other arrangements in which companies use workers but do not directly employ them.

The guidance could affect companies ranging from construction firms to restaurant chains that might be held responsible if, for instance, one of their temp workers did not get paid minimum wage by her employer.

“As the workplace continues to fissure, and as employment relationships continue to become more tenuous and murky, we will continue to identify where joint employment applies and to hold all employers responsible,” David Weil, the administrator of the Labor Department’s Wage and Hour Division, said in a blog post Wednesday.

The department is tasked with enforcing the Fair Labor Standards Act, which sets out standards for minimum wage and overtime pay. The guidance can be used in litigation and administrative proceedings and courts may pay deference to it, though they are not required to because it is not a formal regulation.

In a 15-page document the department explained how to analyze joint employment in “vertical” arrangements, when one company contracts with another company, and “horizontal” arrangements, when one worker is employed by two related companies.

The guidance comes as the Obama administration is moving to make millions more Americans eligible for overtime pay under the FLSA. The Labor Department issued a proposed rule last year that would more than double the maximum income a salaried worker can earn and still be eligible for mandatory overtime to $50,440.

It is also part of a broader federal government push to hold employers accountable to workers. In August, the National Labor Relations Board, which oversees labor law issues related to collective bargaining, expanded its standard for determining joint employment in the long-awaited Browning-Ferris Industries decision.

A trial that could start next month over whether McDonald’s USA is liable for the alleged labor violations of its franchisees is expected to provide an early test of how the board’s standard applies to franchising.

Wednesday’s guidance, while non-binding, could play a significant role in class action litigation for unpaid overtime and other labor violations by emboldening plaintiffs’ lawyers to bring new lawsuits, said Allan Bloom, an attorney with the law firm Proskauer Rose.

(Reporting by Robert Iafolla; Editing by Alexia Garamfalvi and Andrew Hay.)

Here is a copy of the DOL document: Department of Labor Guidance on Joint Employment, January 2016

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Latest Comments

  • February 4, 2016 at 9:28 am
    Rosenblatt says:
    I agree with Agent and bob - we should never forget what happened in WW2 w/ the Nazi's. That was NOT the point of my post, but it doesn't surprise me that both of you respond... read more
  • February 4, 2016 at 9:24 am
    Rosenblatt says:
    Bob, slow your roll. I did not imply I went through WW2 in Germany - I said MY FAMILY went through it at that time & place. "We are going to remember those travesties, and... read more
  • February 2, 2016 at 6:03 pm
    Agent says:
    Bob, good posts answering the Nazi issue. We should never forget what those less than humans did to the Jews and all the others murdered in the name of the National Socialist... read more
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