Dive Brief:
- According to the U.S. Department of Labor, its recently issued new guidance for determining when an employee is considered “jointly” employed by two businesses is simply a clarification of existing policy.
- But, according to the Wall Street Journal and employment law experts, employers are now at a higher risk when it comes to DOL wage and hour penalties.
- Mainly, the change affects organizations who outsource parts of their workforce because they face higher odds for violations connected to their so-called contingent workforce (mainly temps and contract workers).
Dive Insight:
The Journal reported that the employment law firm Ogletree, Deakins, Nash, Smoak & Stewart PC posted a website analysis that explained the DOL's updated Wage and Hour Division (WHD) guidelines should make employers even more careful when it comes to using contingent workers, including "...workers over whom they have little control."
The Journal also mentioned another leading employment law firm, Seyfarth Shaw LLP, which predicted in a client alert online that the recent change could drive increased investigations and litigation.
Seyfarth Shaw's alert says "The guidance issued by [the Wage and Hour Division]…will likely be used by the plaintiffs’ bar to try to pin liability for [Fair Labor Standards Act] violations, for example on upper-tier contractors, franchisors, staffing agencies, lenders, private equity firms; at the very least, we expect additional parties to be more commonly named in wage and hour litigation…"
In short, the detailed client briefing says employers who use the wide range of various forms of non-fulltime workers should stay very alert because the WHD clarification is "squarely targeted at their business models."
