October 21, 2021

Volume XI, Number 294

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October 21, 2021

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Return to “Direct Control” Standard for Joint Employers

On June 7, 2017, in a return to pre-Obama era standards, the U.S. Department of Labor (DOL) announced the withdrawal of two informal guidance letters impacting the “joint employer” doctrine.

The “joint employer” doctrine determines when one business can be held liable for another employer’s violations of the federal Fair Labor Standards Act (FLSA) and other employment laws. Historically, the DOL said that this doctrine only applies where one company has “direct control” over another company’s workplace. The broader standard created by the 2015 and 2016 guidance letters indicated that a business could be considered a “joint employer” where it exercises sufficient “indirect control” over a worker or where the worker was economically dependent upon the business. The expanded standard disproportionately impacted companies that engaged in certain businesses, including construction work, hospitality and food service, and franchisor/franchisee business models.

The withdrawal of the Obama-era guidance letters returns the DOL to the traditional economic realities test, which is based on “direct control.” This turn of events notwithstanding, the National Labor Relations Board (NLRB) still uses the “indirect control” test, creating risks and uncertainty for many businesses until the NLRB reverses its position.

© 2021 Honigman Miller Schwartz and Cohn LLP National Law Review, Volume VII, Number 159
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About this Author

Kimberly Yourchock, Honigman Law Firm, Labor and Employment Attorney
Partner

Kim Yourchock is a labor and employment attorney focusing her practice on sexual harassment; breach of contract; retaliation; and violation of whistleblower protections, wage and hour laws, family medical leave laws, wrongful discharge, and related tort claims. 

313-465-7562
Sean Crotty, Honigman Law Firm, Labor and Employment Litigation Attorney
Partner

Sean Crotty possesses extensive experience counseling employers on a broad range of employment and labor law matters, including discrimination, strategic workforce planning and noncompete agreements, and trade secret matters. He also litigates employment, noncompete, and trade secret claims before state and federal trial courts, appellate courts, and administrative bodies. 

313-465-7336
Matthew Disbrow, Employment Attorney, wage, hour issues, overtime, Honigman Law
Partner

Mr. Disbrow is a labor and employment attorney who advises clients concerning a wide spectrum of employment matters, including wage and hour issues, overtime issues, executive employment and compensation, employment discrimination, and other employment issues.  He represents employers in federal and state administrative proceedings, and trial and appellate courts.  Mr. Disbrow’s clients include automobile manufacturers, automotive suppliers, lending institutions, technology companies, property management companies, hospitality companies, and building contractors.

313.465.7372
Christopher Kazanowski, honigman miller schwartz cohn, wage attorney, EEOC law
Partner

Mr. Kazanowski is a labor and employment attorney who concentrates his practice on employment litigation and employment counseling.  He represents employers and their managers in federal and state courts and administrative proceedings.

  • Defends wage and hour claims, including Fair Labor Standards Act collective actions

  • Conducts employee investigations and consults regarding employment screening procedures

  • Reviews employment and separation agreements for high-level management positions

  • Reviews employee handbooks and...

313-465-7332
Russell Linden, Honigman Law Firm, Labor and Employment Litigation Attorney
Partner

Russell Linden is a seasoned labor and employment attorney with a wealth of experience representing clients in a variety of matters involving labor negotiations, arbitrations, civil rights, wrongful discharge, and other areas of employment and labor law. He argues employment and labor cases before various state courts, the Michigan Court of Appeals, U.S. District Courts in Michigan and elsewhere, the U.S. Court of Appeals for the Sixth Circuit, and various state and federal agencies.

313-465-7466
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