The Department of Labor (DOL) recently proposed a new joint employer rule that would clarify and redefine the interpretation of joint employer status under the Fair Labor Standards Act. Although the rule is not yet effective, employers should anticipate its passage. The DOL proposes a four-factor balancing test to determine joint employer status by analyzing whether the potential joint employer:
(i) hires or fire employees;
(ii) supervises and controls the employee’s schedule or the conditions of employment;
(iii) determines the employee’s rate and method of payment; and
(iv) maintains the employee’s employment records.
Application between Franchisors and Franchisees
The DOL’s proposal also includes illustrative examples to bring further clarity in applying the proposed joint employer rule. One such example illustrates application of the proposed rule in the franchisor/franchisee context. In sum, a franchisor and franchisee are not considered joint employers simply because the franchisor provides sample employment applications, forms, and other documents for the franchisee’s use in operating the franchise, especially where the licensing agreement provides that the franchisee is solely responsible for day-to-day operations. Following the DOL’s announcement, the International Franchise Association released a statement in support of the proposed rule.
Danielle Jenkins is an attorney in the Firm’s Franchise Law & Business Litigation Practice Groups. If you have any questions or concerns about this issue or any other matter, please contact Danielle directly at 813-223-1099.