So said Administrator of the Labor Department’s Wage/Hour Division David Weil on January 20, 2016 in announcing the Labor Department’s Interpretation No. 2016-1 issued that date. This Administrative Interpretation (AI) addresses joint employment under both the Fair Labor Standards Act (FLSA) and also the Migrant and Seasonal Agricultural Worker Protection ACT (MSPA). Importantly, where joint employment is found, the employee’s hours worked for all of the joint employers during the workweek are aggregated for purposes of calculating overtime pay, and when joint employment is found to exist, all joint employers are “jointly and severally” liable for compliance with the FLSA. Like the concept of “employment’ under the FLSA, so also the concept of “joint employment” is to be construed expansively using an “economic realities of the working relationship” test which is broader than common law concepts of employment and joint employment which look to the amount of control that an employer exercises over an employee.
The AI addresses the dual concepts of “horizontal” and “vertical” joint employment The focus of a horizontal joint employment analysis is the relationship between the two or more employers, which may share economic ties and have common managers. Such factors such as common ownership, overlapping officers/directors/executives/managers, shared operational control, and intermingling of operations, will be examined. The focus of a vertical joint employment analysis instead examines economic realities of the relationships between an intermediary employer (typically a staffing agency, subcontractor or other form of labor provider) and another entity involved in the work upon whom the economic realities show the worker is economically dependent. Factors such as direction/control and supervision of work, control over employment conditions, permanency and duration of relationship, repetitive or rote nature of work, whether the work is integral to the potential joint employer’s business, whether the work is performed on the premises of the potential joint employer, and performance of certain administrative functions commonly performed by employers, will be considered.
Revised Fact Sheet #35 of the Wage and Hour Division further advises that the analysis for determination of joint employment under the Family and Medical Leave Act (FMLA) is the same as under the FLSA.
The AI comes as the Obama Administration is moving to make millions more Americans eligible for overtime under the FLSA through the Labor Department’s proposed rule doubling to $50,440. the maximum income a salaried employee may earn and yet be eligible for mandatory overtime, and as the National Labor Relations Board has expanded its standard for determination of joint employment.