New Federal Wage/Hour Regulations

The federal Department of Labor has announced new regulations which update the test for determining a joint-employer relationship under the Fair Labor Standards Act (FLSA). These are situations where multiple employers may have liability for a single employee. While the concept of joint employment has been developing in courts and under state law, the federal regulations remained the same for decades.

The new regulations establish a balancing test which contains four factors. The test analyzes whether the alleged joint employer:

• hires or fires the employee;
• supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
• determines the employee’s rate and method of payment; and
• maintains the employee’s employment records.

The regulations also clarify when additional factors should be used to determine joint-employer status. They also identify specific business models, contractual agreements and business practices that do not make joint-employer status more or less likely.

The new regulations take effect on March 20, 2020. They do not impact the tests for joint-employer status under other federal employment laws. While the new regulations are interesting and will be important for federal wage and hour cases, many California employers should be more concerned with liability under state wage and hour law. As a result, employers should also be aware of situations which could give rise to joint-employer liability under California law.