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For the first time in 60 years, the U.S. Department of Labor updated the Fair Labor Standard Act’s (FLSA) joint employer regulations. (29 C.F.R. §§ 791.1 to 791.3.)

The new regulations, effective March 16, 2020, identify three situations where a joint employment relationship likely exists:

The Final Rule applies a four-factor test to make this determination, and considers whether the potential joint employer:

None of these four factors is controlling, and the weight given to each factor varies depending on the circumstances.

The intent of these updates is to provide more certainty to employers in assessing risks of joint employment liability. If two entities are joint employers under the FLSA, the employee’s hours worked for each of the joint employers are aggregated and considered part of one employment. This aggregation affects the calculation of the number of hours worked in a week, the employee’s regular rate of pay, and the amount of overtime due to the employee. All joint employers are jointly and severally liable for FLSA compliance. Additionally, each joint employer can take credit towards the minimum wage and overtime requirements for payments made to an employee by every other joint employer.

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