July 30, 2021

What Was, Is Again – Joint Employer Rule Changes (Again!)

On July 29th,  the U.S. Department of Labor (DOL) announced it was rescinding the prior, “final” rule that defined when two entities would be considered joint employers. The new rule takes effect September 28, 2021.  Confused?  Here’s a quick timeline.

  • January 12, 2020 – DOL announced the new joint employer rule
  • March 16, 2020 – the new rule took effect
  • September 8, 2020 – a court vacated the rule
  • March 11, 2021, DOL issued a Notice of Public Rule Making (NPRM) to rescind the final rule
  • April 12, 2021 – Notice & Comment period on the NPRM closed


What is this about?  Let’s say Company A contracts with Company B to provide a service, such as cleaning services, maintenance, security, or providing temporary workers.  When Company B’s employees work on Company A’s worksite, Company A managers give those workers directions. Maybe they also do a little coaching, counseling, and correcting of Company B’s employees. Maybe they give them access to some of Company A’s employees’ perks, like access to the employee lounge, parking lot, free meals, snacks, or more. Maybe they start granting or denying the worker’s requests for days off instead of directing the worker back to Company B.  Incrementally, Company B employees are starting to look like Company A employees.

So What?  The implications can be BIG! Now, let’s say one of those Company B employees needs time off from work for a medical reason.  Do you have to provide that worker with FMLA rights?   What if the employee works more than 40 hours in a work week when you combine the hours worked for the two companies; are you responsible for FLSA overtime?  While this action impacts the definition of joint employers under laws enforced by the DOL, this issue has implications under myriad other laws. Do you have to providea reasonable accommodation under the ADA to the employee of Company B? Can the employee of Company B file a claim against your company under OSHA if they think you provided an unsafe workplace? What if Company B is subjected to a union organizing campaign, can that creep into your workplace and include your employees? Yep – the implications are those and more. like a harassment or discrimination charge or claim under Title VII.

The prior rule, the one that has now been rescinded, read in part, ““it may reduce the number of businesses currently found to be joint employers from which employees may be able to collect back wages due to them under the Act.” When the rule if officially rescinded effective September 28th, we can reasonably expect the reverse impact, an increase in the number of businesses found to be joint employers.

Now What? Stay tuned. The DOL is not proposing regulatory guidance to replace the rule it is rescinding. The DOL reports that it “will continue to consider legal and policy issues relating to FLSA joint employment before determining whether alternative regulatory or subregulatory guidance is appropriate.” In the meantime, courts and the DOL may use different tests to assess joint employment liability, such as common law, manner and means, and economic realities. Employers should consider some common factors like: (1) the extent to which you control the manner and means of how other companies’ employees do their work (see examples above); (2) the extent to which the worker is economically dependent upon you; and (3) guidance from your company’s legal counsel!

What about other working and worker relationships like volunteers, interns, independent contractors, and more?  Check out FiveL Company’s May webcast, “Are You My Employer? (Re)defining Working Relationships – The Evolution Continues,”  archived here. $25 per person.  Still provides 1.25 HRCi and SHRM credit