June 22, 2018
Eighty years after the Fair Labor Standards Act was passed, a new report from Gibson Dunn discusses the current divide over joint employer status, the outdated Labor Department regulations, and the maze of evolving circuit court tests with which large multi-state employers must cope.
The DOL first introduced the concept of joint employment just a year into the FLSA’s existence, as Congress did not include a definition in the Act. The Department's rules remain largely unchanged.
The courts were left the task of formulating a measurable test for which there are now eight different standards, including an economic realities test and a functional control test that each include different factors.
A radical new standard by the Fourth Circuit has the potential to penalize and deter economically sensible business arrangements between contractors and subcontractors.
What's next: According to DOL Solicitor Kate O’Scannlain, the Labor Department may issue new guidance or rulemaking to clarify joint employer liability and employee versus independent contractor status. Separately, the Association is urging the Senate to consider Rep. Bradley Byrne's (R-AL) House-passed "Save Local Business Act" (H.R. 3441).