On July 29, 2021, it was announced that the Joint Employer Status under the Fair Labor Standards Act that took effect March 2020, will be rescinded by the US Department of Labor effective September 28, 2021.
By rescinding the rule, the US Department of Labor will ensure more workers receive minimum wage and overtime protections of the Fair Labor Standards Act (FLSA). Additionally, the rescinded rule included a description of joint employment contrary to statutory language and Congressional intent. The rule failed to take into account the Department’s prior joint employment guidance.
Under the FLSA, an employee can have more than one employer for the work they perform. Joint employment applies when, for the purpose of minimum wage and overtime requirements, the department considers two separate companies to be a worker’s employer for the same work. An example of a joint employer relationship is a nursing facility that contracts with a staffing agency to provide cleaning staff which the nursing facility directly controls. If the agency and the nursing facility are joint employers, they are both responsible for worker protection.
The FLSA requires covered employers to pay employees at least the federal minimum wage for every hour they work and overtime compensation at not less than one-and-one-half times their regular rate of pay for every hour they work over 40 in a workweek. A strong joint employer standard is critical because FLSA responsibilities and liability for worker protections do not apply to a business that does not meet the definition of employer.
The Final rule rescission can be accessed here.
Additional information about the FLSA and other laws it enforces can be accessed here.
Compliance Perspective
Issue
The Fair Labor Standards Act must be adhered to at all times within your facility. It is imperative that all employees who are responsible for determining rates of pay, deciding overtime pay eligibility, and performing recordkeeping of wages are well trained in the Fair Labor Standards Act requirements. When employing minors within your facility, it is critical that all federal laws are adhered to for the working minor. Violations of the Act can result in fines and other penalties.
Discussion Points
- Review your policies and procedures on fair wages, overtime pay eligibility, and recordkeeping. Ensure that the rescinded rule is not incorporated into your policies Update your policies as needed.
- Train all staff who have responsibility for ensuring fair wages, overtime pay eligibility, and recordkeeping so that they are knowledgeable about your policy and procedures to ensure they comply with the requirements. Train all staff who have responsibility for supervising and scheduling minors about the requirements that must be met when you employ minors in your setting. Document that these trainings occurred, and file each signed document in the employee’s education file.
- Periodically audit to ensure that fair wages, overtime pay eligibility, and the recordkeeping of hours worked are accurate and being reported correctly. Also, when employing minors, ensure that all employment requirements and limitations on hours worked are followed.
