HR Administration

Legal Briefing: Labor Department Examines Multiple Choice

By Mark Kobata

Mar. 31, 2016

The U.S. Labor Department released an Administrator’s Interpretation on joint employment under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, or MSPA, calling for greater scrutiny of arrangements in which multiple companies might jointly employ workers. The guidance is on identifying scenarios in which two or more employers jointly employ an employee and are thus jointly liable for compliance under the FLSA and MSPA. It states that the scope of employment relationships and joint employment under the acts should be interpreted as broadly as possible. The Labor Department identifies two types of joint employment arrangements that should be analyzed: The first is horizontal joint employment in which an employee is employed by two or more technically separate but related or overlapping employers. The second is vertical joint employment in which an employer has contracted or arranged with an intermediary to provide it with labor and/or perform for it some employer functions. Administrator’s Interpretation No. 2016-1 (Jan. 20, 2016).

Impact: Employers using business models or labor arrangements that could result in joint employment should be cautious since the Labor Department is closely monitoring various potential joint-employment scenarios to achieve statutory coverage, financial recovery and future compliance.

Mark T. Kobata and Marty Denis are partners at the law firm Barlow, Kobata and Denis, which has offices in Beverly Hills, California, and Chicago. To comment, email editors@workforce.com.

Mark Kobata and Marty Denis are partners at the law firm Barlow, Kobata and Denis, which has offices in Beverly Hills, California, and Chicago.

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