headshot of Secretary of Labor Eugene Scalia
Secretary of Labor Eugene Scalia

Senior living industry companies and other types of firms that use temporary workers or contractors through staffing agencies now have some clarification as to when they have minimum wage and overtime pay obligations for particular workers.

On Monday, the Department of Labor announced a new “joint employer” rule that will become effective March 16. The new rule updates the regulations interpreting joint employer status under the Fair Labor Standards Act, which requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek.

Under the FLSA, an employee may have, in addition to his or her employer, one or more joint employers — additional individuals or entities who are liable with the employer for the employee’s wages. The final rule:

  • specifies that when an employee performs work for the employer that simultaneously benefits another person, that person will be considered a joint employer when that person is acting directly or indirectly in the interest of the employer in relation to the employee;
  • says that an employer’s franchisor, brand and supply, or similar business model and certain contractual agreements or business practices do not make joint employer status under the FLSA more or less likely; and
  • includes examples designed to help further clarify when joint employer status exists.

The rule issued Monday contains the same four-factor “balancing test” that was part of the rule proposed in April by the department. The test is meant to help determine FLSA joint employer status in situations where an employee performs work for one employer that simultaneously benefits another person. The test considers whether the potential joint employer has the power to:

  • hire or fire the employee;
  • supervise and control the employee’s work schedule or conditions of employment to a substantial degree;
  • determine the employee’s rate and method of payment; and
  • maintain the employee’s employment records.

“The Department’s final rule provides additional guidance on how to apply this test. For example, to be a joint employer under the Act, the other person must actually exercise — directly or indirectly — one or more of the four control factors,” the Labor Department said in the rule. 

The rule is expected to be published in the Federal Register on Thursday but is available as a PDF now.

The final rule released Monday does not address joint employer status under other federal employment laws, such as the National Labor Relations Act, the Employee Retirement Income Security Act of 1974, the Migrant and Seasonal Agricultural Worker Protection Act, or Title VII of the Civil Rights Act.

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