DOL Implements New Rules for Joint Employment

 Posted on February 12, 2016 in DuPage County Business Law Attorney

Legal analysts predict the new joint employment policy changes recently put into place by the U.S. Department of Labor (DOL) could increase the risk of businesses being penalized for overtime and/or minimum wage violations.

The DOL was prompted to make these policy changes as more and more businesses turn to subcontractors, staffing companies, and other outside service providers to take care of duties which in the past were traditionally done in-house by a company's own employees. Some of the more common types of services which are now being outsourced include grounds keeping, human resources, janitorial and payroll.

This common practice has often left employer liability in question and the Labor Department hopes these new regulations will clear up any confusion.

One of the new policies implemented addresses vertical joint employment. According to the DOL, this is when a person is employed by two employers, leaving both of those employers responsible for the employee under the law.

The Department cites the example of a person who works for a staffing company, which is contracted to do the housekeeping services at a hotel. Although it is the staffing company who is responsible for supervising the employee, setting their hours, etc., the employee depends on the hotel for their work and therefore, the hotel is considered a joint employer under the law, and is required to be compliant with the Fair Labor Standards Act (FLSA) when it comes to anything having to do with that employee's job.

The FLSA oversees the standards for minimum wage, overtime pay, recordkeeping, and youth employment.

By implementing this joint employment policy, the DOL hopes that this will ensure that businesses who do contract with staffing companies will keep vigilant that those companies are also compliant with the FLSA since that business is also now on the hook for penalties and fines if they are not compliant.

The new rules also address when an employee works at two different businesses which are owned by the same company. This is referred to as horizontal joint employment—for example, a hair stylist who works for a company who owns several salons and he or she divides her work week up at two different salons. The employee's hours at each location must now be combined when it comes to determining overtime hours and overtime pay.

Staying compliant with government rules and regulations is critical to the success of a business, but it can also be confusing to understand and keep track of the ever-changing policy updates the government puts into place. Please contact an experienced DuPage County business law attorney with any questions or concerns you may have regarding your company's federal or state compliance.

Sources:

http://www.dol.gov/whd/flsa/Joint_Employment_AI.htm

http://www.dol.gov/whd/flsa/

http://blogs.wsj.com/law/2016/01/21/joint-employment-guidance-spells-more-liability-for-businesses-lawyers-say/