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.