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3 possible traps in the new Labor joint employment guidance

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An arm of the U.S. Labor Department that oversees overtime pay has just released a batch of advice on joint employment that could affect some insurance-based benefits arrangements.

David Weil, the administrator of the department’s Wage and Hour Division, posted Administrator’s Interpretation Number 2016-1, a document that explains how he thinks joint employment intersects with the federal Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act.

See also: Home-care workers win right to get overtime pay, minimum wage

Weil’s division also released a fact sheet that explains how the Wage and Hour Division thinks joint employment intersects with the Family and Medical Leave Act (FMLA).

Officials talk about “horizontal joint employers,” such as two restaurants that share the time of one employee, and “vertical joint employers” such as a general contractor and a subcontractor that both have some say over the work of one employee.

Neither document refers directly to the major federal insurance benefits laws, such as the Employee Retirement Income Security Act (ERISA), the Health Insurance Portability and Accountability Act (HIPAA), the Mental Health Parity and Addiction Equity Act (MHPAEA), or the Patient Protection and Affordable Care Act (PPACA).

But many agents and brokers who sell group disability insurance plans offer absence management programs that administer FMLA leave, and federal regulators, federal courts and lawmakers could end up borrowing ideas from the Wage and Hour Division when designing and updating rules for insurance-based employee benefits.

Weil says his division’s emphasis is on “protecting workers in fissured workplaces.”

“While we devote significant resources to enforcing labor standards in order to protect the rights of workers, we also have a commitment to engage with and educate employers so they know about their responsibilities and can operate in compliance with the laws that we are tasked to uphold,” Weil writes in a blog about the new guidance.

For ideas about three areas in the joint employer rules where client traps could hide, read on.

Creepy surgeon

1. Employers may misunderstand how FLSA joint employer rules relate to health benefits arrangements.

The rules don’t even refer to the PPACA employer definition, and the PPACA employer definition does not rely on the FLSA definition of employer.

But the exact relationship between the FLSA employer definition and the PPACA employer definition seems to be hazy, and subject to change.

In an older batch of guidance, the Wage and Hour Division tells employers that ask about the relationship to refer to the guidance issued by the agencies that administer PPACA for more information about employer status.

Republican opponents of PPACA have tried to reduce the scope of the PPACA employer coverage mandate by proposing bills that could affect the kinds of matters normally governed by FLSA, such as whether an employee is a full-time worker or a part-time worker.

See also: Republicans plan to erode Obamacare by redefining work hours 

Time clock

2. The new rules could complicate Family and Medical Leave Act (FMLA) eligibility calculations.

An employer may think the hours it uses to calculate FLSA overtime pay are the hours it uses to calculate FMLA eligibility.

But, if a worker is exempt from FLSA overtime, an employer still has to include those extra, overtime-exempt hours when calculating FMLA eligibility.

Adding joint employment rules to the mix could make the calculations even trickier.

See also: Uber loses bid to block drivers from suing as group for tips


3. A worker’s primary employer may think it’s the worker’s secondary employer.

In the FMLA fact sheet, for example, officials note that one employer in a joint employer relationship will be the primary employer and that one will be the secondary employer.

If an employee who alleges a FMLA violation wants to be restored to work, the primary employer is the one responsible for getting the employee back to work.

The primary employer is also the one responsible for getting FMLA notices to the jointly employed employee.

See also:

PPACA creates new class of whistleblower retaliation claims

What kinds of group plan suits could PPACA spawn?


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