DOL Retools Joint Employment: Corporate Counsel Newsletter

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Alan Bush and Lee Winkelman are freelance contributors for the Corporate Counsel Newsletter.  It’s published by the Corporate Counsel Section of the Texas Bar.  Their second article, “DOL Retools Joint Employment,” appeared in the Spring 2016 issue.

The Department of Labor, which polices the federal overtime pay laws, is looking to loosen the standard for joint employment.  Here’s what Alan and Lee had to say about it:

Employment lawyers have pronounced 2016 the “Year of the FLSA.” We can’t argue. Overtime pay will be front and center on corporate counsel’s list of HR priorities. The Department of Labor (“DOL”), which enforces the Fair Labor Standards Act (“FLSA”), has been busy.

Recent activity from the DOL and the plaintiff’s bar turns heads. Over last summer, the DOL churned out a proposed rule on the white collar overtime exemptions. The new rule would more than double the salary threshold for an employee to be exempt from overtime pay. That would mandate overtime pay for 60% of American wage earners. The DOL also issued an “Interpretation” on who qualifies as a true “independent contractor.” Expect more DOL enforcement activity and private lawsuits on contractor misclassification. Meanwhile, continuing layoffs in the oil patch are providing plaintiff’s lawyers with a ready stable of potential clients.

But now, the DOL wants to tag more companies for overtime liability on employees who weren’t on their payroll. The company that cuts the paycheck is not the only one on the hook for an employee’s overtime pay – so is any “joint employer.” In late January, the DOL announced that it believes the “joint employment” doctrine uses looser criteria than the Fifth Circuit would currently say.

That’s huge. If federal courts side with the DOL, more Texas companies would do penance for the overtime pay sins of common commercial partners. Corporate subsidiaries and affiliates could trigger liability for their parent companies. Vendors could expose their customers. Staffing companies and professional employer organizations could wind up on the hook along with their customers. Let’s unpack the DOL interpretation and how Texas companies can handle it…

Read the full article for more.