We are about nine months into President Trump’s second term, and the best word to describe how employee relations have changed may be “slowly.” The National Labor Relations Board (NLRB) still does not have a quorum, meaning it remains unable to issue precedential decisions. Staffing and volume issues at the federal Equal Employment Opportunity Commission have become so dire that we are routinely seeing the investigation of cases take over one year of time. There hasn’t been the sweeping overhaul of anti-discrimination laws that some might have expected.

The Department of Labor (DOL), on the other hand, wants to appear that it’s keeping busy. In June, the DOL announced an opinion letter program to “empower the public with the information they need to understand and comply with the laws the department enforces” (according to Deputy Secretary of labor Keith Sonderling). As part of that process, earlier this week the DOL promulgated opinion letters on four different “hot topics” of labor and employment law: joint-employer relationships, family and medical leave, tip pooling, and “emergency pay” under the Fair Labor Standards Act (FLSA).

The opinion letter on joint employment was particularly instructive. The letter discussed an instance where an employee worked in both a restaurant and a members-only club. Both entities had separate business structures and used different timekeeping and payroll systems. However, the two entities both operated within the same hotel and their ownership appeared to be common. Further, employees frequently would work for both, including, sometimes being “on the clock” for one while performing limited services for the other.

Under those facts, the DOL stated that an employee working in both entities would be entitled to combine their hours worked under both in a week so that they would receive overtime pay under the FLSA (if their hours were over 40). The DOL explained that “corporate formalities do not necessarily override the FLSA’s application.” It was the DOL’s opinion that there was a “horizontal joint-employer relationship” under the FLSA, i.e., there was sufficient association between the two to consider them jointly and severally liable for FLSA compliance, including any wages owed to the employees.

The opinion letter demonstrates that an “employer-friendly” DOL only will go so far. It also shows that employers cannot “paper over” the reality of the working relationship. Maintaining separate legal entities and even separate payroll systems is an indicator of separation, to be sure, but for purposes of the FLSA, when two entities commingle employees, they are more than likely both going to be on the hook for that employee’s hours.

If you own multiple businesses and they have overlapping employees, this opinion letter should serve as a wakeup call. Contact an RKW employment attorney to discuss further.