The U.S. Department of Labor has just announced a final rule updating regulations governing joint-employer status under the Fair Labor Standards Act (FLSA).
The new rule, one that business groups have lobbied for diligently, makes it much more difficult for employees to claim they have two employers in any challenge of wage and overtime rules.
The new rule is a major victory for large franchised brands and companies using staffing firms because it dramatically limits their legal exposure in these disputes.
How will the new rule be applied?
Let’s look at the example of a restaurant worker working for a large restaurant chain to understand how the new rule will work. In a case such as this one, under the new rule, the restaurant employee can only pursue a wage or overtime claim against the local store owner and not the national chain.
The Obama Administration had sought to have the Department of Labor look at these cases as a matter of joint liability for the parent company and the local franchisee.
The new rule is clearly employer-friendly.
According to a spokesperson for the International Franchise Association, “This resolution provides much-needed clarity for the 733,000 franchise establishments across America.”
There are expected to be legal challenges to the new rule from at least one worker advocacy group.
According to the Wall Street Journal, “to determine whether a worker is jointly employed by two businesses, the department will consider four factors. Does the potential second employer:
• Have the power to hire or fire the employee?
• Supervise and control the employee’s work schedule or conditions?
• Determine the employee’s pay rate and method of payment?
• Maintain the worker’s employment records?”
The new rule will take effect on March 16, 2020.
If you’re an employer and have questions about labor and employment law, including wage and overtime disputes, consider calling on the attorneys at Kainen, Escalera & McHale in Connecticut. We do one thing and one thing only – we are an employer defense law firm – in fact, we are one of the largest employer defense law firms in the region. What’s more, each of our attorneys has over 25 years of experience in employment and labor law matters and can provide your business with comprehensive legal counsel ranging from assistance with necessary preventive measures to trial advocacy. Please call us if we can help you.
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