DOL Replaces Guidance on Employee Classification

The U.S. Department of Labor (DOL) has withdrawn its 2014 guidance regarding the meaning and scope of the term “employment relationship” under the federal Fair Labor Standards Act (FLSA) and replaced it with its guidance from 2008. As a result of this move, the DOL no longer advises that “most workers are employees.”

Withdrawn 2014 Guidance
In 2014, the DOL issued guidance on how to determine whether an employment or independent contractor relationship exists for purposes of the federal FLSA. The guidance stated, among other things, “Applying the FLSA’s definition [of “employ”], workers who are economically dependent on the business of the employer, regardless of skill level, are considered to be employees, and most workers are employees.” Effective immediately, this guidance has been withdrawn.

2008 Guidance Once Again Effective
The 2014 guidance has been replaced by guidance from 2008. The 2008 guidance does not contain the guidance that “most workers are employees.” However, this guidance does include the same “economic realities” test present in the 2014 guidance, under which determination of employee status is made by considering the following factors:

  • Whether the work performed is an integral part of the employer’s business.
  • Whether the worker’s managerial skill affects the worker’s opportunities for profit or loss.
  • The worker’s relative investment compared to the employer’s investment.
  • Whether work performed requires special business skills, judgment, and initiative.
  • Whether the worker-employer relationship is permanent or indefinite.
  • The nature and degree of the employer’s control of the work.
Originally posted by HR360

DOL Issues Guidance on Joint Employment Under the FLSA

Fact Sheets and Q&As Available for Employers

The United States Department of Labor (DOL) has issued guidanceregarding the meaning and applicability of joint employment under the federal Fair Labor Standards Act (FLSA).

Background
The FLSA requires employers to (among other things) pay covered employees who are not otherwise exempt at least the federal minimum wage and overtime pay of one-and-one-half-times the regular rate of pay. Under the law, it is possible for a worker to be employed by two (or more) joint employers who are both responsible for compliance. This is because joint employment is included in the law’s definition of “employment,” which was written to have as broad an application as possible.

Determining When Joint Employment Exists
According to the guidance, the most likely scenarios for joint employment are:

  • Where the employee has two or more technically separate but related or associated employers. Joint employment exists where two or more employers benefit from the employee’s work and they are sufficiently related to or associated with each other (this is sometimes called “horizontal joint employment” by the courts).
  • Where one employer provides labor to another employer and the workers are economically dependent on both employers. Joint employment also exists where a worker is, as a matter of economic reality, economically dependent on two employers: an intermediary employer (e.g., a staffing agency or other labor provider) and another employer who engages the intermediary to provide workers. (Some courts have called this “vertical joint employment.”)

Responsibilities of Joint Employers

  • Joint employers (whether vertical or horizontal) are responsible—both individually and jointly—for compliance with the FLSA.
  • Joint employers must combine all of the hours worked by the employee in a workweek to determine if the employee worked more than 40 hours and is due overtime pay.

Note: The analysis for determining joint employment under the Family and Medical Leave Act (FMLA) is the same as under the FLSA. For information about how joint employment affects FMLA coverage and eligibility determinations, click here.

Additional resources, including Fact Sheets and Q&As, are available on the DOL’s website.

HR360 Editorial Team http://www.hr360.com