Earlier this month, the Department of Labor (DOL) released an Administrator’s Interpretation addressing joint employment under the Fair Labor Standards Act (FLSA). The memorandum provides a detailed description of the DOL’s standards for determining whether joint employment exists, that is, whether two or more businesses may be held jointly and severally responsible for paying a single employee at least the minimum wage, overtime, and for otherwise complying with the FLSA. Such issues are particularly common in relationships involving staffing agencies and independent contractors, as well as in the hospitality, construction, janitorial, and agricultural industries more generally. Coupled with the DOL’s prior Administrative Interpretation on the definition of independent contractors, discussed here, this “guidance,” which declares that the scope of joint employment is “as broad as possible,” will likely result in increased litigation. The two memoranda have the combined effect of increasing the pool of both potential plaintiffs and defendants in misclassification cases, as well as increasing the number of potential defendants and perceived “deep pockets” in all other FLSA claims. Given this climate, conducting a self-audit to ensure compliance with all provisions of the FLSA may be particularly prudent at this time.
If you would like to discuss conducting a self-audit or if you have any questions about the FLSA, please contact any of the attorneys at Royal, P.C.