Joint Employment Liability: What Administrative Agencies’ Rule Revisions Mean for Employers

Washington Legal Foundation’s Legal Backgrounder

Nathaniel M. Glasser, Stuart M. Gerson, Paul DeCamp, and Carly Baratt co-authored an article in the Legal Backgrounder, published by the Washington Legal Foundation, titled “Joint Employment Liability: What Administrative Agencies’ Rule Revisions Mean for Employers.”

Following is an excerpt (see below to download the full version in PDF format):

Nearly 60 years ago, the United States Department of Labor (“DOL”) promulgated 29 CFR § 791.2, which imposes joint liability under the Fair Labor Standards Act (“FLSA”) where multiple persons are “not completely disassociated” or “acting entirely independently of each other” with respect to an individual’s employment.  Recognizing that the “not-completely-dissociated” standard is unclear and subject to broader application than intended, on January 1, 2020, the DOL issued a final rule to revise and clarify the responsibilities of businesses in potential joint-employment arrangements.  Specifically, the final rule sets forth a new four-factor test for determining joint employment, focusing on whether an entity exercises certain powers to a degree that justifies joint status with a given employer.

The DOL’s efforts to relax the joint-employer standard mirror those of the National Labor Relations Board (“NLRB”), which, during the Trump administration, has enacted a rule that reverses the expansive view taken in Browning-Ferris Industries. Not to be left out, the Equal Employment Opportunity Commission (“EEOC”) has announced that it will issue proposed amendments to regulations implementing several of the laws under its purview, including Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and the Americans with Disabilities Act.  Although the EEOC’s position is not entirely clear, it would not be surprising if the EEOC joins the DOL in narrowing the scope of joint employment—a trend that should be welcome news to employers.