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U.S. government signals more businesses liable as joint employers

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(Reuters) — More U.S. companies could be classified as "joint employers" of workers employed by a staffing agency or contractor and held liable for labor violations tied to those staff, the U.S. Labor Department said in guidance published Wednesday.

Joint employment has emerged as a major issue in franchising, contracting, temporary staffing and other arrangements in which companies use workers but do not directly employ them.

The Labor Department guidance could affect companies ranging from construction firms to restaurant chains that could be held responsible if, for instance, one of their temp or contract workers did not get minimum wage from his or her employer.

The guidance comes as the Obama administration is moving to make millions more Americans eligible for overtime pay under the Fair Labor Standards Act. The Labor Department issued a proposed rule last year that would more than double the maximum income a salaried worker can earn and still be eligible for mandatory overtime to $50,440.

In a 15-page document — which does not create any new obligations — the department explained how to analyze so-called joint employment in "vertical" arrangements, when one company contracts with another company, and "horizontal" arrangements, when one worker is employed by two related companies.

"As the workplace continues to fissure, and as employment relationships continue to become more tenuous and murky, we will continue to identify where joint employment applies and to hold all employers responsible," David Weil, the administrator of the Labor Department's Wage and Hour Division, said in a blog post Wednesday.

The Labor Department is tasked with enforcing the FLSA, which sets out standards for minimum wage and overtime pay. The guidance can be used in litigation and administrative proceedings, and courts may pay deference to it, though they are not required to because it is not a formal regulation.