Department of Labor Guidance on Joint Employment Highlights Risks for Employers

January 26, 2016

In a recent OnPoint, Dechert discussed the National Labor Relations Board’s controversial decision in Browning-Ferris Industries of California, Inc., in which the Board abandoned its long-standing joint employer test in favor of a standard pursuant to which an entity’s “right to control” employees’ terms and conditions of employment, even when unexercised, could be sufficient to subject the entity to liability as a joint employer. On January 20, 2016, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) issued an Administrator’s Interpretation under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”) that further confirms the significant risks faced by entities that are parties to “non-traditional” employment arrangements. Of particular significance to many employers is the DOL’s emphasis on joint employer liability in so-called “vertical” employment relationships, including the potential ways in which parent companies and other owners can be deemed joint employers with other entities in the chain of ownership.

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