On 12 January 2020, the US Department of Labor (DOL) revealed fresh regulations that set out four factors to be used to determine joint-employer status as regards the responsibilities and obligations intended in the Fair Labor Standards Act (FLSA). The new joint-employer status qualification scale, which comes into force on 16 March 2020, seeks to limit the likelihood of co-employment status. This new scale is a response to previous efforts (especially by the Obama administration) to broaden the notion and to include in the notion most triangular business relationships as well as some business relationships, whereby some employees within one entity actually work with a high degree of dependency in a different entity. The trend towards broader definitions had sparked criticism by those representing franchisor entities that risked finding themselves liable for payment of federal salary minima and overtime hour pay as a result of the notion of co-employment.
The International Franchise Association immediately welcomed the news, emphasizing that confusion of the regulations had led to many dispute cases arising. Effectively, the Fair Labor Standards Act (FLSA) allows for a joint-employer to be responsible for non-compliance as regards payment of the federal minimum salary and overtime hours by the entity with which it shares the employment of workers.
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