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DOL Formally Declares 4-Factor Balancing Joint Employer Test Valid

01 / 23 / 2020

Joint Employer Part 791 (January 12, 2020)

On January 12, 2020, the Department of Labor announced that it had formally adopted as a final rule, the 4-Factor Balancing Joint Employer Test applicable in FLSA cases.  Under this test, 

In the final rule, the Department:

(1) 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;

(2) provides a four-factor balancing test to determine when a person is acting directly or indirectly in the interest of an employer in relation to the employee;

(3) clarifies that an employee’s “economic dependence” on a potential joint employer does not determine whether it is a joint employer under the FLSA;

(4) specifies 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

(5) provides several examples applying the Department’s guidance for determining FLSA joint employer status in a variety of different factual situations.