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A perfect example of why businesses need to pay attention to the joint employer rule was provided recently by the U.S. Department of Labor.

The Wage and Hour Division (WHD) has reached an agreement with a Pennsylvania bookbinding company to pay nearly $600,000 in back wages, damages and penalties. The catch: The underpaid employees were all employed by a temp agency engaged by the bookbinder.

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As the Department of Labor press release put it:

“WHD determined Fox Bindery Inc. and the employment agencies jointly employed the temporary workers. WHD’s investigation also found that the temporary employment agencies knowingly failed to pay temporary employees for additional time they worked in excess of 40 hours a week, and knowingly paid employees who performed work for Fox Bindery Inc. less than the minimum wage of $7.25 per hour, a FLSA violation.

Investigators also determined Fox Bindery Inc. made no effort to determine if these employees were properly paid, despite receiving detailed invoices from the temporary staffing agencies.”

The company has agreed to change its business practices.  But as the website HR Dive observed, joint employment is a major issue, even if the rules and responsibilities are not always clear.

“Under both the National Labor Relations Act (NLRA) and the FLSA, joint employment liability remains somewhat of a gray area,” writer Katey Clarey explains. “DOL recently announced plans to tackle joint employment under the FLSA via regulation, explaining that it wants to clarify joint employment relationships because changes in the 21st century workplace are not reflected in the current regulatory framework.”