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Updated H&R Benefit News: Fed Proposes New Test To Clarify Definition Of Joint Employer

Chris Cooley labor laws, HR & Benefits News
Chris Cooley

HR & Benefits News is a monthly column by Chris Cooley, co-founder of MyHRConcierge and SMB Benefits Advisors.

If you’re involved in a franchise arrangement or use a staffing firm to hire seasonal or temporary workers, you’ll be interested in the proposal issued by the U.S. Department of Labor (DOL) on April 1, to more clearly define joint employer status.  

The proposal is meant to help firms with the same employee better understand when they are jointly obligated to comply with the Fair Standards Labor Act (FSLA)—a law that sets minimum wage, overtime pay eligibility, recordkeeping and child labor standards that affect full-time and part-time workers.

 

Potential impact and next steps

“The proposed changes are designed to reduce uncertainty over joint employer status and clarify for workers who is responsible for their employment protections, promote greater uniformity among court decisions, reduce litigation and encourage innovation in the economy,” according to the DOL.

Some in the business press are framing this as a win for franchisors, particularly those in the fast-food industry, who have been sued in recent years for wage-law violations alleged to have been committed by their franchisees. For example, Bloomberg Law’s Chris Opfer reported the rollout of this DOL proposal “to shield franchisers and businesses that hire workers through staffing firms from liability for some minimum wage and overtime pay violations.”

Grocers and others who want to comment on the joint employer status proposed ruling have until June 25, 2019. Several of our clients have asked how to go about commenting. We suggest starting with a review of the proposal, FAQs and fact sheet. Then, decide whether to comment on any part of the examples that are unclear or don’t speak to your specific situation.

 

Joint Employer Status

“Under FSLA, an employee may have—in addition to his or her employer—one or more joint employers,” according to the DOL.  A joint employer is any additional individual or entity who is jointly and severally liable with the employer for the employee’s wages.”

 

Proposed 4-part test

If the proposed rule is adopted, DOL would consider four factors to determine whether one firm is a joint employer of another organization’s workers. To determine whether the firms are equally liable for compliance with federal labor laws, DOL would evaluate “whether the potential joint employer actually exercises the power to: hire or fire the employee; supervise and control the employee’s work schedule or conditions of employment; determine the employee’s rate and method of payment; and maintain the employee’s employment records.”

The FAQ on the proposal provides nine examples to show how the proposed joint employer status rule could be applied in a variety of situations.

 

Stay on top of labor employer/employee definitions

Staying up to date on both federal and state regulations that define employee status is essential for grocers. For example, anti-discrimination laws and mandatory state payroll deductions are defined by state labor regulations.

Both state and federal laws are constantly changing. And, we encourage clients to frequently review policies and practices when it comes to seasonal and temporary workers, consultants and independent contractors. Not complying with these obligations can be costly in many ways.

Chris Cooley is co-founder of MyHRConcierge and SMB Benefits Advisors.  MyHRConcierge specializes in helping small to mid-sized grocers throughout the U.S. He can be reached at 855-538-6947, ext. 108 or at [email protected]

About the author

Treva Bennett

After 32 years in the newspaper industry, she is enjoying her new career exploring the world of groceries at The Shelby Report.

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