DOL Continues Expansion of “Joint Employer” Coverage
The US Labor Department’s Wage and Hour Division (WHD) recently issued an Administrative Interpretation that greatly expands the possibility that two or more businesses are “joint employers” of one employee. Joint employment status means two or more employers may be held jointly and severally responsible for fulfilling minimum wage, overtime, and other obligations under the Fair Labor Standards Act.
The WHD’s guidance discusses two types of relationships: (i) “horizontal,” in which the employee is potentially employed by two related companies, and (ii) “vertical,” in which the employee is directly employed by a staffing company or contractor but is dependent upon (and thus employed by) a second business. If joint employment exists under either analysis, both employers could be liable for overtime and other wage and hour violations.
When viewed alongside last summer’s DOL guidance on classification of independent contractor/employees, the imminent increase on salary level required for white collar exemptions, and the National Labor Relations Board’s recent decisions on joint employment, it is clear that today’s labor and business models face a rapidly changing legal landscape.
While these Administrative Interpretations are not binding law, they are persuasive to courts and are used by DOL agents in compliance investigations. The WHD has made clear that it intends to influence how companies do business. This opinion specifically highlights a few industries, but all businesses should be mindful of these issues when considering alternative staffing models and labor related contracts. Having a qualified employment law attorney review the arrangement can go a long way to addressing joint employer risks.
For more information, contact a Hall, Arbery, Gilligan, Roberts & Shanlever attorney in Atlanta or Savannah.