New DOL Guidance on Joint Employment: Navigating Heightened Scrutiny and Minimizing FLSA Liability

On Jan. 20, 2016, the DOL’s Wage and Hour Division issued an Administrator's Interpretation (AI) setting forth an expansive definition of joint employment. AI 2016-1 reflects the DOL’s position that the possibility of joint employment should be routinely considered in FLSA cases and outlines the agency’s framework for analyzing whether joint employment exists for the purpose of federal wage and hour liability.

The guidelines describe two types of joint employment—horizontal joint employment and vertical joint employment—and provide a non-exhaustive list of factors the agency will consider in analyzing whether joint employment exists under each model.

While some factors are straightforward (common ownership, agreements between the potential joint employers), others are more nebulous, rejecting a strict focus on control and examining instead the “economic realities” of the employment situation.

The DOL’s expansive view of joint employment signals the agency’s intention to closely scrutinize employment arrangements to identify scenarios in which two or more employers may be jointly liable for wage and hour violations under the FLSA. Employment counsel must prepare companies to evaluate their existing practices and contracts, and consider how to best minimize the risk of being deemed a joint employer of another company’s workers.

Across the spectrum of business relationships, counsel must be able to explain the new standard and help clients assess their risk of being deemed a joint employer under the FLSA and the potential impact that could have on business operations.

Listen as our experienced panel explains how counsel can structure and guide implementation of agreements with subcontractors, staffing agencies and independent contractors to minimize the risk of employer or joint-employer liability in the wake of the DOL’s expansive guidelines for establishing joint-employer status. The panel will discuss the agency’s analysis of horizontal and vertical joint employment and the factors that point to joint-employer liability for wage and hour violations.

1. Legal framework for defining employment relationship under FLSA and DOL AI 2016-1
   1. Horizontal joint employment
   2. Vertical joint employment
2. Evaluating existing structure, operations, agreements and practices
3. Best practices for minimizing risk of being deemed a joint employer

The panel will review these and other key issues:

• How does the DOL’s recent guidance affect the current legal standard governing joint-employer liability for FLSA violations?
• What provisions are necessary for agreements between businesses and subcontractors, staffing agencies, contingent workers, and independent contractors to avoid employer or joint-employer status?
• What are best practices for structuring and implementing revisions in existing staffing, subcontractor and independent contractor agreements to avoid a joint employment determination?
• How will the DOL’s expansive analysis of joint employment affect wage and hour liability?