Archive for February, 2020

What’s on Second? New Regulations on Joint Employment under the FLSA – Part 2.

Yesterday we talked about the fist scenario under the new DOL regulations on joint employment under the FLSA.  Today we will talk about the second scenario the DOL gives.

(e)(1) In the second joint employer scenario, one employer employs a worker for one set of hours in a workweek, and another employer employs the same worker for a separate set of hours in the same workweek. The jobs and the hours worked for each employer are separate, but if the employers are joint employers, both employers are jointly and severally liable for all of the hours the employee worked for them in the workweek.


29 CFR § 791.2(e)(1).

Now here the DOL does not use the same 4-point test as they did in the first scenario.  Instead:

(2) In this second scenario, if the employers are acting independently of each other and are disassociated with respect to the employment of the employee, each employer may disregard all work performed by the employee for the other employer in determining its own responsibilities under the Act. However, if the employers are sufficiently associated with respect to the employment of the employee, they are joint employers and must aggregate the hours worked for each for purposes of determining compliance with the Act. The employers will generally be sufficiently associated if:

(i) There is an arrangement between them to share the employee’s services;

(ii) One employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or

(iii) They share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer. Such a determination depends on all of the facts and circumstances. Certain business relationships, for example, which have little to do with the employment of specific workers—such as sharing a vendor or being franchisees of the same franchisor—are alone insufficient to establish that two employers are sufficiently associated to be joint employers.


29 CFR § 791.2(e)(2)(i) – (iii).

Scenario number 1 makes a lot of sense; we see that temp employee situation every day.  But why this one?  Well, what the DOL (and the courts for years) are preventing here is a situation where two separate say corporate entities or LLC’s or even partnerships hire the same employee and then work that employee 30 hours for one corporation and 30 hours for the other corporation in the same workweek.  If the employers are not “joint employers” that employee gets 30 hours of straight time from one employer and 30 hours of straight time for the other employer.  But if they are joint employers, the same employee is entitled to 40 hours of straight time and 20 hours of time and one-half.  And both employers are liable for paying the overtime. 

(1)(i) Example. An individual works 30 hours per week as a cook at one restaurant establishment, and 15 hours per week as a cook at a different restaurant establishment affiliated with the same nationwide franchise. These establishments are locally owned and managed by different franchisees that do not coordinate in any way with respect to the employee. Are they joint employers of the cook?

(ii) Application. Under these facts, the restaurant establishments are not joint employers of the cook because they are not associated in any meaningful way with respect to the cook’s employment. The similarity of the cook’s work at each restaurant, and the fact that both restaurants are part of the same nationwide franchise, are not relevant to the joint employer analysis, because those facts have no bearing on the question whether the restaurants are acting directly or indirectly in each other’s interest in relation to the cook.


29 CFR § 791.2(g)(1)(i) & (ii).

29 CFR § 791.2(g)(1)(i) & (ii).

Under the prior guidance this is exactly what some employee groups were trying to do.  Work at two entirely separate McDonalds and sue McDonald Corporation for overtime.  Now don’t get too excited about going out and setting up a bunch of LLCs, there are limits to the protection the new regulations provide:

(2)(i) Example. An individual works 30 hours per week as a cook at one restaurant establishment, and 15 hours per week as a cook at a different restaurant establishment owned by the same person. Each week, the restaurants coordinate and set the cook’s schedule of hours at each location, and the cook works interchangeably at both restaurants. The restaurants decided together to pay the cook the same hourly rate. Are they joint employers of the cook?

(ii) Application. Under these facts, the restaurant establishments are joint employers of the cook because they share common ownership, coordinate the cook’s schedule of hours at the restaurants, and jointly decide the cook’s terms and conditions of employment, such as the pay rate. Because the restaurants are sufficiently associated with respect to the cook’s employment, they must aggregate the cook’s hours worked across the two restaurants for purposes of complying with the Act.


29 CFR § 791.2(g)(2)(i) & (ii).

If you want to see the new regulations you can find them here and if you are an employer who has questions, give me a call.

Who’s on First? New Regulations on Joint Employment under the FLSA – Part 1.

You know, over the years we have had occasion to discuss the issue of joint employment under the FLSA.  It was a big deal during the last administration.  In fact, back then we were talking about an Administrator’s Interpretation that the Obama DOL issued to “clarify” joint employer status under the FLSA.  That guidance was concerning in that it appeared to really broaden the scope of when a joint employer relationship existed.  It was such a big deal that we at WNJ spent a fair amount of time talking about what it meant.  We even did a panel discussion or two on the issue.  And then we got a new administration, and that new administration withdrew the guidance.  And we waited. 

The wait is over.  On January 16, 2020 the Department of Labor published final regulations on the issue.  These regulations amend 29 CFR Part 791 and are an attempt to clarify when a joint employer relationship exists.  As the DOL points out, it has been a while since Part 791 was updated:  “Since this 1961 update, the Department has not published any other updates to part 791 until this final rule.”  I think we would all agree that 59 years is a long time and a lot has changed about how the workplace works in that time.  So, what do the new regulations provide?  Well, including the preamble and all the required stuff, the Federal Register publication of the new regulations is 42 pages long.  We are not going into all of that.  I’m going to try to boil it down to a manageable bite-size bit or two for you.

Let’s start with why we care.  Under the FLSA if two employers are joint employers, both employers are “jointly and severally liable” for making sure the employee gets the minimum wage and probably more importantly, overtime.  So the new regulations say that there are really two scenarios under the FLSA where the joint employer analysis is relevant. 

(a)(1) In the first joint employer scenario, the employee has an employer who suffers, permits, or otherwise employs the employee to work, see 29 U.S.C. 203(e)(1), (g), but another person simultaneously benefits from that work. The other person is the employee’s joint employer only if that person is acting directly or indirectly in the interest of the employer in relation to the employee.


29 CFR § 791.2(a)(1)

.

What are we talking about here?  Most commonly we are talking about a situation where you run a company and you hire a temporary service agency to provide you with employees.  In this case, the DOL has articulated a 4-factor test to determine if a joint employer relationship exists:

Those four factors are whether the other person:

(i) Hires or fires the employee;

(ii) Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;

(iii) Determines the employee’s rate and method of payment; and

(iv)  Maintains the employee’s employment records.


Id

Now there are some ruffles and flourishes that explain all that but the important thing to remember is no single factor standing alone is enough and the fourth factor (maintaining records) is not enough standing alone.

So how are you supposed to know how to apply that to a real life situation, like for example I own a company and I retained a temp agency go send me temps?  Well, the DOL was nice enough to include some examples in the regs.

(6)(i) Example. A packaging company requests workers on a daily basis from a staffing agency. Although the staffing agency determines each worker’s hourly rate of pay, the packaging company closely supervises their work, providing hands-on instruction on a regular and routine basis. The packaging company also uses sophisticated analysis of expected customer demand to continuously adjust the number of workers it requests and the specific hours for each worker, sending workers home depending on workload. Is the packaging company a joint employer of the staffing agency’s employees?


29 CFR § 791.2(g)(6)(i).

Sound familiar?  Sure it does, it’s you if you use temps.  So what is the answer?  DOL gives us that too.

(ii) Application. Under these facts, the packaging company is a joint employer of the staffing agency’s employees because it exercises sufficient control over their terms and conditions of employment by closely supervising their work and controlling their work schedules.


29 CFR § 791.2(g)(6)(ii).

OK Steve, now give me an example where there is a joint employer relationship.  Don’t have to, the DOL did.

(7)(i) Example. A packaging company has unfilled shifts and requests a staffing agency to identify and assign workers to fill those shifts. Like other clients, the packaging company pays the staffing agency a fixed fee to obtain each worker for an 8-hour shift. The staffing agency determines the hourly rate of pay for each worker, restricts all of its workers from performing more than five shifts in a week, and retains complete discretion over which workers to assign to fill a particular shift. Workers perform their shifts for the packaging company at the company’s warehouse under limited supervision from the packaging company to ensure that minimal quantity, quality, and workplace safety standards are satisfied, and under more strict supervision from a staffing agency supervisor who is on site at the packaging company. Is the packaging company a joint employer?


29 CFR § 791.2(g)(7)(i)

(ii) Application. Under these facts, the packaging company is not a joint employer of the staffing agency’s employees because the staffing agency exclusively determines the pay and work schedule for each employee. Although the packaging company exercises some control over the workers by exercising limited supervision over their work, such supervision, especially considering the staffing agency’s supervision, is alone insufficient to establish that the packaging company is a joint employer without additional facts to support such a conclusion.


29 CFR § 791.2(g)(7)(ii).

See the difference?  Here it seems to be that the DOL considers day-to-day supervision the deciding factor.  And in most cases you supervise your temps, so you are (and always have been) a joint employer with the temp agency.

OK, that’s cool and surprisingly not that surprising.  What about scenario number 2?  Well, let’s talk about that next time shall we?

COVID-19. What can employers do now?

I assume you all have not been burying your head in the sand and you all know now that the COVID-19, that’s what the World Health Organization has labeled the current outbreak of Coronavirus, is sort of in the news. And I am equally sure you are all wondering what, as an employer, you should be doing about it.  Before we get into that, let’s do quick refresher on the Americans with Disabilities Act. Don’t forget, the ADA places some restrictions on employers and only allows medical examinations, where the employer can show that the exam is job related and consistent with business necessity, or there is a reasonable belief that the employee poses a direct threat to the health or safety of the individual or others.  See https://www.eeoc.gov/policy/docs/guidance-inquiries.html

That’s nice, but how do we know if there is a “direct threat” from COVID-19?  While we don’t have anything from the EEOC on COVID-19 yet, during the N1H1 flu outbreak the EEOC did published guidance called PANDEMIC PREPAREDNESS IN THE WORKPLACE AND THE AMERICANS WITH DISABILITIES ACT.  https://www.eeoc.gov/facts/pandemic_flu.html

In that guidance, the EEOC stated:

Direct threat is an important ADA concept during an influenza pandemic.

Whether pandemic influenza rises to the level of a direct threat depends on the severity of the illness. If the CDC or state or local public health authorities determine that the illness is like seasonal influenza or the 2009 spring/summer H1N1 influenza, it would not pose a direct threat or justify disability-related inquiries and medical examinations. By contrast, if the CDC or state or local health authorities determine that pandemic influenza is significantly more severe, it could pose a direct threat. The assessment by the CDC or public health authorities would provide the objective evidence needed for a disability-related inquiry or medical examination.

During a pandemic, employers should rely on the latest CDC and state or local public health assessments. While the EEOC recognizes that public health recommendations may change during a crisis and differ between states, employers are expected to make their best efforts to obtain public health advice that is contemporaneous and appropriate for their location, and to make reasonable assessments of conditions in their workplace based on this information.

So, relying on the EEOC, let’s go see what the CDC is saying. And sure enough, the CDC just published Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19), February 2020. You can find it here:  https://www.cdc.gov/coronavirus/2019-ncov/specific-groups/guidance-business-response.html

And what are the CDC’s recommendations? 

Recommended strategies for employers to use now:

Actively encourage sick employees to stay home

Separate sick employees

Emphasize staying home when sick, respiratory etiquette and hand hygiene by all employees

Perform routine environmental cleaning

Advise employees before traveling to take certain steps

So basically the CDC is advising that you tell people to stay home when they are sick. A couple of things to keep in mind. First, “Separate sick employees” does not mean quarantine them or put them in the back corner of the plant. What the CDC is saying here is if somebody comes to work sick or gets sick at work, send them home. Second, the CDC is recommending you have a lot of tissues and hand sanitizer on site and you encourage employees to use them. Probably a pretty good idea.

One other thing the CDC says you should do that I want to point out, because this is a bit of a departure from what we would normally think, the CDC is specifically instructing that if you have a confirmed case of COVID-19 in the workplace, you need to tell your employees. 

If an employee is confirmed to have COVID-19 infection, employers should inform fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality as required by the Americans with Disabilities Act (ADA). Employees exposed to a co-worker with confirmed COVID-19 should refer to CDC guidance for how to conduct a risk assessment of their potential exposure.

Now this DOES NOT MEAN you tell everybody that Bill has coronavirus. It simply means you tell them they have been exposed and encourage them to get checked by their doctor.

If you are an employer and you want to discuss what else you can be doing and what all of this means for your workplace, give us a call.