Joint Employer Issues for Restaurant Workers

Department of Labor Revises “Joint Employer” Definition:

What Restaurant Workers Should Know

In May 2019, the United States Department of Labor proposed revisions of what a “joint employer” means under the Fair Labor Standards Act. Under the current definition of joint employment, multiple employers can be found responsible for paying hours worked by shared employees in some situations.

The exact way in which this decision is made will have a substantial impact on restaurant workers in the country.

The Joint Employer Rule

Joint employer relationships are found to exist if an employee performs work that benefits multiple employers. Joint employer relationships also exist in the following situations:

• The employers have an arrangement to share the employee’s service,
• The employers directly or indirectly act in each other’s interests, or
• The employers directly or indirectly share control of a worker.

If a joint employer status is determined to exist, all of the work performed by an employee during a work week will be viewed as one employment. The existence of a joint employer relationship can have a profound impact when it comes to liability and wage and hour decisions.

Challenges Presented by Joint Employer Law

Joint employer law has a history of inconsistent application, which has led to confusion about how the regulation should be applied. For example, while the Second Circuit Court of Appeals has applied a 10-factor test, the Fourth Circuit has exercised a four-factor test.

Another case of confusion with joint employer laws concerns the National Labor Relations Board. In 2016, the National Labor Relations Board ruled that a California employer and its temporary staffing agency were joint employers because one company exercise “indirect control” over the other. A year later in 2017, however, the National Labor Relations Board overruled this approach.

How the Department of Labor is Addressing Uncertainties

To resolve current confusion about how these regulations should be applied, the Department of Labor distinguished between two different situations in its recent decision:

• Two employers who employ the same worker for different hours during the week. In the first case, the Department of Labor has proposed applying a “not completely disassociated” test.
• An employee is only employed by one business, but other employers also benefit from the work. In this type of situation, the Department of Labor has proposed weighing factors about which employer hires or fires the employee, supervises the employee’s schedule and work conditions, establishes how the employee will be paid, and keeps the employee’s employment records. When considering these factors, the Department of Labor has stated that no one factor will be deciding and that the court will not consider whether an employee is financially dependent on one of the employers.

What the Joint Employer Rule means for Restaurant Workers

Each year, there are a number of high-profile wage and hour cases that are heard concerning restaurants and their subcontractors. The joint employer law has also come into play regarding national fast food chains and franchisees. Some of the important takeaways that restaurant workers should glean from these decisions include:

• Restaurant workers should be wary of their employer attempting to transfer them from one restaurant location to another restaurant location to avoid paying overtime hours.
• A manager or owner who works as the bartender is prohibited from participating in tip share or a tip pool.
• Arrangements in which a restaurant hires a subcontracted worker should be in writing to avoid any uncertainties about the nature of the relationship.

Speak with a Knowledgeable Wage and Hour Lawyer

The Department of Labor’s proposed revision will remain open to public comment through June, 2019. The decision will likely have a substantial impact on the lives of many restaurants workers as well as other employees. See our Legal Center for Restaurant Workers to learn more about your rights as a restaurant worker.

If you are a restaurant server who was paid less than you were owed by an employer, you should not hesitate to speak with an experienced lawyer. Contact Herrmann Law today: 817-479-9229 or submit your case online (here) and someone from our office will contact you to schedule an appointment.