On January 20, 2016, the DOL’s Wage and Hour Division (WHD) Administrator David Weil published Administrator’s Interpretation No. 2016-1, Subject: Joint employment under the Fair Labor Standards Act and Migrant and Seasonal Worker Protection Act. A copy is attached to this notice. The intent of the Interpretation is to clarify how the WHD views joint employment scenarios that may allow two or more employers to be held accountable under the FLSA and the MSWPA. The Interpretation, which is fifteen pages long, describes two business models under which WHD will normally analyze joint employer situations.

“Horizontal joint employment” is the term applied to situations where more than one employer employs the same employee and the employers are technically separate but significantly related to or overlapping with one another. The focus is on the relationship between the employers. The Interpretation cites as an example a restaurant server who works at two different restaurants that are operated by different legal entities but that share joint ownership, management, and payroll, along with scheduling and supervision of the employee.

“Vertical joint employment” is the term applied to situations where multiple distinct employers exercise some amount of control over various aspects of the employee’s work, such as directing, controlling or supervising the work and controlling the working conditions; the duration and permanency of the relationship; and the repetitive nature of the work. Other factors include whether the employee’s work is integral to the potential joint employer’s business, whether the work is performed on site or elsewhere, and whether the potential joint employer performs administrative functions for the employee such as handling payroll, administering benefits including workers’ compensation insurance, and the like. The focus is on the relationship between the employee and the employers. The Interpretation cites as an example a laborer for a drywall company that is a subcontractor where the general contractor provides all the necessary equipment, supervision, and administrative support; retains control of scheduling and assignments; and retains the right to remove the laborer from the site. Common temp, staff leasing, and other contract service relationships may also be determined to constitute vertical joint employment. The Interpretation is replete with other examples and detailed explanations.

Employers should be aware that the WHD is actively looking for these situations so it can hold as many employers liable for FLSA and MSWPA violations as possible in its efforts to enforce these statutes. Anticipate that the laws will be applied liberally to find joint employer liability if possible. Accordingly, contracts and agreements between potential joint employers should clearly state the nature of the relationship and address the control and function elements described in the Interpretation. A written contract will be significant evidence in the issue, but the potential joint employers’ actions, if they differ from the language of an agreement, will take precedence.

Finally, employers should also be aware that employees can sue on their own under both the FLSA and the MSWPA, and that this Interpretation potentially opens the door to more employees suing not only their immediate employers but any other entity (and possibly individuals) who may be deemed a joint employer. The Interpretation may also be used to try to support joint employer liability under anti-discrimination, anti-retaliation, and other statutes.

As the WHD’s guidance is intricate and detailed, we encourage you to contact us or your employment law counsel for assistance in complying with this and all other employment-related laws.

For more information from the WHD perspective, visit the WHD blog at:

https://blog.dol.gov/2016/01/20/are-you-a-joint-employer/