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On April 1, the US Department of Labor proposed a new rule seeking to narrow the application of joint employer status under the Fair Labor Standards Act (FLSA). A finding of joint employer status can impose joint and several liability on a business along with the hiring employer for the employee’s wages. By narrowing the test, the proposal brings potential good news to franchise businesses in particular.

The proposal outlines a “four-factor balancing test” for the Department to apply collectively in its assessment of whether a business is a joint employer with another.


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