The proposed joint work regulation announced by the US Department of Labor last week will provide employers with the clarity and guidance needed to issue them, experts say.
But they warn even if the rule would only give interpretation instructions to the law of fair labor markets and can be appealed by courts. It may also differ from the interpretations of other federal authorities and would not repeal any rules issued by individual states that have different standards for who should be considered a common employer.
DOL said its proposal "would ensure employers and joint employer employers clearly understand their responsibility to pay at least the federal minimum age for all hours worked and overtime for all hours worked over 40 years of work week", according to a statement issued last week.
It said that the department proposes a clear, four-factor test "based on well-founded precedent" that would consider whether the potential joint employer actually exercises the power to: employ or fire the employee; monitor and control worker's work plans or terms of employment determine employee tax rate and payment method
Minister of Labor Alexander Acosta said in a statement that the proposal "will reduce uncertainty about joint employer status and clarify for workers responsible for their employment protection".
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Employers have been provided with no clear guidelines under DOL regulations on who is considered a joint employer, since controversial guidance issued by the Obama administration in 2015 that extended the definition of employees was withdrawn by the Trump administration in 2017.
" It's a solid proposition that balances interests between employers and workers and goes back to what the law has been for many years, even in California, "said Tammy D. McCutchen, a principal with the Littler Mendelson PC in Washington.
The proposal provides some clarity and "is much better than the previous position that DOL took where everyone could be a common employer," says Jonathan A. Segal, a manager with Duane Morris LLP in Philadelphia.  "If I'm a franchisor, I'm pretty happy with this," says Eric B. Meyer, a partner with FisherBroyles LLP in Philadelphia. Franchisors did not mean to be on the hook for their franchisee's employment practices, Meyer said.
The standards set out in the proposal are based on a 1983 case at the 9th US Circuit Court of Appeal in San Francisco Bonnette v. California Health & Welfare Agency, Ms. McCutchen said. "It's a test that the Obama administration had abandoned" with no regulations, she said.
James J. Plunkett, Senior Associate Advisor with Ogletree, Deakins, Smoak Nash & Stewart P.C. in Washington, said he believes the proposal reflects the decision Bonnette with whom many are already familiar, and which other circles have applied in their own decisions, there is a "good potential" that the final DOL regulation will to be close to what was proposed.
However, Brendan Sweeney, with advice from Jackson Lewis LLP in Melville, New York, said: "It is a positive development for employers, but everyone must understand that it does not have the power" A court "can decide it is not a valid interpretation of the law on fair work. "
Some courts have analyzed the question of who is a joint employer during another test and can continue to do so," and they are not bound to follow DOL's interpretation, Mr Sweeney.
However, he added: "I would say that DOL's interpretation is one, a very valid interpretation of the Charter, and two, it is oh no, if adopted, would give much more security to the companies" and clear rules.
"It is important to remember that this is just a state authority," says Segal, adding other federal agencies such as the United States Equal Opportunities Commission may have different interpretations and some states "would have a more robust common definition. employer, "he said.
" This is a good starting point for employers, but it should not be the stopping point in the analysis, "says Segal.
Experts also point to parallel action by the National Labor Relations Board, which in September proposed a joint employer issue promulgated by the Obama administration. While DOL issues rules according to the FLSA, NLRB issues its rules according to the national employment relationship law.
Mr. Plunkett said, "Bottom line for employers is that both of these proposals suggest more streamlined and easy test lines for employers.
At the same time, in other activities, DOL's long-awaited overtime proposal, issued in March, was apparently intended to ensure as smooth a process as possible, experts say.