On Wednesday, January 20, the U.S. Department of Labor (DOL) issued an administrator’s interpretation [pdf] that includes guidelines for when companies should be considered “joint employers” under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The joint employer debate has been gaining steam over the past year. In August 2014, the National Labor Relations Board (NLRB) ruled in Browning-Ferris that under the National Labor Relations Act a company and its contractor can be seen as a single joint employer even if the company has not exerted overt control over the worker’s terms and conditions of employment. The Occupational Health and Safety Administration (OSHA) has considered joint-employer liability between franchisors and franchisees under worker safety laws. Now with the release of this sub-regulatory guidance, the DOL joins the NLRB and the OSHA in the ongoing debate over the extent of joint employer liability.
In the memo, David Weil, the DOL Wage and Hour Division head, took note of the “growing variety and number of business models and labor arrangements.” The memo suggests “the expansive definition of ‘employ’ [under the FLSA and MSPA] as including ‘to suffer or permit to work’ reject[s] the common law control standard and ensures that the scope of employment relationships and joint employment under the FLSA and MSPA is as broad as possible,” covering some of these “evolving employment scenarios….” Weil further identified two types of joint-employment arrangements that may be considered in analyzing joint-employment cases, and suggested one or both methods should be applied depending on the nature of the relationship between the employers and the employee.
First, Weil discusses “horizontal joint employment,” whereby “two (or more) employers each separately employ an employee and are sufficiently associated with or related to each other with respect to the employee.” Examples of horizontal joint employment may include separate restaurants that share economic ties and managers, or home health care providers that share staff and management. Second, “vertical joint employment” may exist “when an employee of one employer (referred to…as an ‘intermediary employer’) is also, with regard to the work performed for the intermediary employer, economically dependent on another employer. Examples may include employers who utilize staffing agencies for temporary employees.
The memo suggests this guidance is needed, in part, “to hold all responsible parties accountable for their legal obligations.” However, the impact of the memo is uncertain because whether the guidance is accepted is for each court to decide. Some judges may grant more deference to Weil’s interpretation than other judges. What is clear, however, is that there is a fast-moving trend towards finding more employers liable for more employment violations.