DOL issues joint-employer rule: Employer liability narrowed
The U.S. Department of Labor (DOL) has issued its long-awaited rule on joint employment. The bottom line is that the agency has opted to reestablish the understanding that had been in place for decades—i.e., routine, direct control of the terms and conditions of employment will be the measure of joint employment. The new rule will become effective March 16. A result of the new rule is that liability for many workplace laws is more constricted than that proposed by the Obama administration.
New joint-employer rule
At the core of the DOL's regulation are four criteria. Does the alleged joint employer:
- Hire or fire the employee;
- Supervise and control the employee's work schedule or conditions of employment to a substantial degree;
- Determine the employee's rate and method of payment; and
- Maintain the employees employment records?
No single criterion will be determinative, and assessment of all the criteria will be part of the analysis.
In addition, the rule makes clear that actions—not words—will be assessed. To that end, the rule makes clear that the mere reservation of rights in, for example, a franchise agreement will not be considered unless there is "some actual exercise of control."
Greater clarity
A significant aspect of the new rule is that it provides greater clarity to employers than the more amorphous standard that had been proposed by the Obama administration, which included vague elements of "indirect control."