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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In a welcome decision for franchisors, and first of its kind in the Second Circuit, the Southern District of New York ruled that Domino’s Pizza Franchising LLC, the franchisor (Domino’s), did not exert enough control over its franchisee to warrant joint employer status. This determination means Domino’s will not have to face claims brought under

On June 14, franchisors received good news when the US District Court in the Eastern District of Illinois ruled that Jimmy John’s Franchise, LLC is not a joint employer of its franchisees’ employees.

In 2014, former employees of various Jimmy John’s franchisees brought a collective action against their former franchisee employers and against Jimmy John’s

In a flurry of high-profile decisions issued on the eve of NLRB Chairman Phillip Miscimarra’s term’s expiration, the NLRB has announced employer-friendly standards reversing recently adopted analyses and restoring the historical analyses in perhaps the two most watched (and criticized) categories of employer unfair labor practice (ULP) charges: (1) evaluating work rules for impact on protected concerted activity (formerly the Lutheran Heritage analysis); and (2) joint employer liability (formerly the Browning-Ferris analysis).

Impact on Employers:

As a result of the “new” work rule analysis, employers will be less likely to face scrutiny of employee handbook provisions. Employers now have broader discretion to implement and enforce handbook provisions relating to civility in the workplace and workplace safety (i.e., no cell phone/camera policies, social media). Employers who have dramatically trimmed employee conduct policies have some freedom to reinstate more usable and effective rules, but should note that this area of law is almost certain to fluctuate based on the presidential administration in power.

With the reversal of the joint employer analysis, employers will have less labor risk (bargaining obligations and strikes) when engaging third parties like staffing companies, temporary workers, or co-located workers. Critically, the prospect of becoming bound to a bargaining obligation with  another entity’s employees will be substantially less likely. Avoiding joint employer liability will focus more limiting actual control and direction of non-employees and less on the contractual arrangements with other entities supplying those employees. While this change is unlikely to dramatically change the scope of outsourcing, employers can have more certainty of the scope of potential ramifications and liability in using third party workers.


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U.S. Secretary of Labor Alexander Acosta announced in a June 7, 2017 press release that the U.S. Department of Labor (DOL) has withdrawn two of its recent administrator’s interpretations. One of the administrator’s interpretations, issued in 2015, focused on the misclassification of employees as independent contractors under the Fair Labor Standards Act (FLSA) and indicated

After the NLRB’s aggressive pro-union stance during President Obama’s term, the Board is poised for change under President Trump. On January 23, 2017, President Trump named Philip A. Miscimarra—the sole Republican of three current Board Members—Acting Chairman of the Board. Further, as the Board traditionally has five Members, President Trump will nominate two Members to fill the current vacancies. Assuming President Trump nominates two Republicans as expected, the Board will have a Republican majority for the first time in over nine years. Although it is unclear how far the Board will shift from its recent pro-union stance, three key decisions could be overturned by a Republican-controlled Board.
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While no one knows exactly how Donald Trump’s election as President will impact labor and employment laws in the country, it is a safe bet that there will be changes. Because Trump was virtually silent on the campaign trail regarding the specifics of any employment law policies, we are left to speculate on any upcoming changes.  We provide a brief overview of our best educated guesses on what changes could be in store given the election results.  Given Trump’s position on government enforcement and his pro-business stance, there is an expectation of changes to several employment-related laws.
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Internal pay audits are rarely enjoyable. Depending on the scope, these audits can be complex and require detailed analysis.  However, in the current legal climate, an internal audit can be extremely valuable and greatly reduce, or even eliminate, potential liability for wage and hour claims as well as pay equity claims.  As previously reported on this blog, increased scrutiny into pay equity discrimination, changes in EEO-1 reporting requirements, the Department of Labor’s joint employment efforts, and the updated FLSA exemption rules continue to place companies at greater risk of government audits, fines, and lawsuits.

Many employers may have already reviewed and updated their policies in anticipation of the changes to the “white collar” FLSA exemptions, which go into effect on December 1, 2016. But if your company has not yet done so, or to the extent you have not conducted a more comprehensive internal audit, your company should strongly consider doing so as soon as possible for several reasons.
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On August 1, 2016, the U.S. Department of Labor and Doctors Associates Inc. (Subway Restaurants) announced a voluntary agreement formalizing their ongoing collaboration.  This agreement is a first of its kind and seeks to ensure that franchise owners have the tools necessary to comply with wage and hour laws.  Since 2012, Subway has made available a platform for the DOL to provide training and resources to franchisees.  Despite the DOL’s efforts, other companies have reportedly been reluctant to enter into similar agreements due to fears that other government agencies will use such an agreement as evidence of a joint employer relationship.  Interestingly, Subway has been collaborating with the DOL for over three years and although this collaboration has been very much in the public eye, no agency has indicated that such a relationship would make them a joint employer.  The DOL hopes the fact that Subway, the world’s largest franchisor, entered into the compliance agreement will encourage other companies to follow suit.  Given the various government agencies’ joint employer efforts, all companies, whether franchisors or not, should analyze their own specific circumstances before entering into a similar agreement.
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