Department of Labor Issues Guidance Document on Joint Employer Liability for Violations of the Fair Labor Standards Act
Following the recent lead of the National Labor Relations Board (“NLRB”), on January 20th, 2016 the U.S. Department of Labor (“DOL”) issued a new guidance document which signals a more aggressive approach to holding joint employers responsible for wage and hour violations, including unpaid overtime pay. Under the new guidance document, DOL’s Wage & Hour Division will attempt to hold those employers who “share” employees or use temporary or leasing agencies to staff positions liable for wage and hour violations committed by another employer. This guidance document follows on the heels of the NLRB’s decision in Browning-Ferris Industries of California, 362 NLRB No.186 (2015), which expanded the definition of joint employment for purposes of union recognition and possible violations under the National Labor Relations Act. We expect that other federal agencies, such as the Occupational Health and Safety Administration, will shortly follow the DOL’s lead.
Interestingly, the DOL describes two separate types of joint employment: horizontal joint employment and vertical joint employment. Horizontal joint employment, described in a graphic illustration, is defined as two employers who share the use of the same employees and are connected by way of common ownership or common management. For example, an employee working for Company A 40 hours per week and working 10 hours for Company B with common ownership or management would be entitled to overtime pay for the combined hours.
Vertical joint employment is the type discussed by the NLRB in Browning-Ferris and includes employers who control the terms and conditions of the temporary or leased worker’s job. The more control the employer has over the temporary or leased worker, the more likely the employer will be considered a joint employer.
Thus, companies that share common ownership or common management with other companies need to look carefully at whether or not employees from one company are working with the other company to make sure they are not in violation of the Fair Labor Standards Act. Additionally, employers who use temporary or leased employees need to also determine if they exercise sufficient control over the terms and conditions of the temporary or leased employees work to meet the definition of a joint employer under the DOL guidance.
Stay tuned for further developments in this rapidly expanding area of joint employment. For more information, please contact Mansour Gavin’s Labor and Employment Practice Group.
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