The Labor Department introduced a proposed regulation today that would make it harder to hold businesses jointly liable when their franchisees or contractors violate the Fair Labor Standards Act.
The DOL proposal would use a four-part test to determine whether a business is jointly liable under the 1938 law, which governs minimum wage and overtime. The test would weigh whether the business has the power to hire and fire; to supervise schedules and “conditions of employment”; to set pay, and to maintain employment records.
The proposal would weaken an Obama-era DOL guidance that said a business need have only indirect control over employees to be held jointly liable.
“The proposed changes would provide courts with a clearer method for determining joint employer status, promote greater uniformity among court decisions, and reduce litigation,” said Keith Sonderling, acting administrator for DOL’s Wage and Hour Division, in a written statement.