Every U.S. employer is responsible for displaying certain mandatory labor law postings. Meet that responsibility and you’re in the clear, right? Not so fast. What if you outsource HR functions or payroll to another company, or lease workers from a temp or staffing agency? Alternatively, what if your business relies on a contractor’s employees, or you provide your own employees to work at a client’s place of business? Under a new rule by the Department of Labor (DOL), these types of arrangements may make you a joint employer with the other business. And if so, both entities must follow regulatory guidelines under the Fair Labor Standards Act (FLSA), including the latest posting compliance requirements.
Breaking Down the DOL Rule
After 60 years without any significant updates, the DOL announced a new joint employer rule in January 2020 that includes a four-factor balancing test. As a foundation, joint employment is possible any time an employee performs work for a W-2 employer (such as a contractor, or a temp or staffing agency) that benefits another entity (your business).
Specifically, the four-factor test weighs whether an employer:
- Hires or fires the employee
- Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree
- Determines the employee’s rate and method of payment
- Maintains the employee’s employment records
The DOL emphasizes that a potential joint employer must demonstrate more than the right to exercise control under the four-part balancing test. The employer must actually act on those rights. Also, the fourth factor alone is not enough to determine joint employment.
Keep in mind, too, that the new joint employer rule only applies to regulations enforced by the DOL. Other federal and state employment laws and multi-factor tests may come into play regarding joint employer status.
Why the Joint Employer Rule Matters
When two or more businesses share workers, disagreements can arise over which company is responsible for various federal or state employment laws, particularly wage and hour issues. The joint employer rule, effective March 16, 2020, is designed to reduce uncertainty over this arrangement and clarify for workers who is responsible for their employment protections. As such, joint employers may not only share legal liability, but also an obligation to comply with labor law posting requirements.
Businesses in a joint employer relationship need to uphold all posting requirements because employees will typically sue both entities if there’s a violation.
Bottom line: It’s a sound business practice to ensure posting compliance requirements are being met by all parties. This means complete coverage that includes federal, state, county and city postings, any language requirements and all replacement postings as changes occur.
In today’s legal environment, don’t assume your business is “off the hook” regarding possible employment law oversights just because another entity pays your workers or manages their work. Address these matters in contracts with joint employers to ensure all employment laws are being upheld, including the latest posting requirements.
If your business uses a Professional Employer Organization (PEO), you probably already have an agreement in place addressing this. Most PEOs are actually co-employers (as opposed to joint employers), so they agree to share legal responsibility for employment law compliance, including workplace postings. If you’re unsure, it’s best to clarify with your PEO to prevent posting compliance from falling through the cracks.
Easily Meet Every Posting Requirement
Rather than take on the staggering task of maintaining posting compliance on your own, consider using a reputable service provider to keep your posters up to date at all times. Poster Guard® Compliance Protection guarantees worry-free labor law posting compliance for employers large and small. You’ll receive a complete, up-to-date federal, state and local (city/county) poster set upon enrollment, as well as replacement posters every time a mandatory change occurs – automatically, free of charge – for a full year. It’s a smart solution for you, as well as any agency or business you may work with as a joint employer.