On January 12, 2020, the Department of Labor (DOL) released its final rule that defines joint employer situations in a manner, so that entities such as franchisees and their franchisor will likely not be considered to be joint employers going forward.
The ruling utilizes a four-factor test that analyzes if the respective company:
- 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 pay, and
- Maintains the employee’s personnel records.
Possibly more important are the factors that will be disregarded when determining whether a joint employment situation exists. Specifically, it is stated that a franchisor-franchisee relationship does not explicitly create a joint employer relationship.
Further franchise agreements that require precise procedures, such as “best-practices” background checks, standardized human resource forms, employee handbooks, etc., also do not produce a joint employer scenario. This is great news for franchisors who want to protect their brand with consistent policies and onboarding procedures.
The new rule is expected to become effective the middle of March 2020 (it is dependent upon when it is formally published in the Federal Register).
Posted by: Rudy Troisi, L.P.I., President and CEO, Reliable Background Screening
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