10/3/25 DOL Reiterates Joint Employer Overtime Standards
October 3, 2025
On September 30, 2025, the U.S. Department of Labor (“DOL”) issued an opinion letter addressing the application of overtime requirements to joint employers. DOL opinion letters are not binding, but serve as informative guidance that assists employers in understanding the application of relevant law. As such, the issuance of this opinion letter serves as a great reminder of how to stay compliant with the Fair Labor Standards Act (“FLSA”).
Guidance from the Opinion Letter
In the opinion letter, the DOL advised that an employer who operates both a restaurant and a members-only club on separate floors of a hotel was a “joint employer” of employees who work at both establishments. In reaching this conclusion, the DOL noted that the establishments operated in the same building, under common management, and using similar trade names, and under common ownership, among other things. Although the two establishments were described as having separate business structures and using separate timekeeping and payroll systems, these factors did not outweigh those in favor of finding the establishments to be joint employers.
As such, the letter indicated that employees who work for both the restaurant and the members-only club would be entitled to overtime pay if their combined hours between the two locations exceeded 40 hours in one workweek.
Wage and Hour Reminders Underlying the DOL Opinion
Under the FLSA, employees must be paid for all “hours worked.” Further, employees must be paid at a rate at least one-and-one-half times higher than their regular rate of pay if they work beyond 40 hours in one workweek.
Joint employers are jointly and severally liable for FLSA compliance. As highlighted by the opinion letter, “corporate formalities do not necessarily override the FLSA’s application.” Accordingly, separate entities may be considered joint employers even if they are legally separated or otherwise attempt to distinguish themselves from each other. The test for whether an employer is a “joint employer” looks at the “economic realities” of the relationship between the employers, assessing many relevant factors.
In order to maintain compliance with the FLSA, it is essential that employers know and understand whether they are operating as joint employers. Joint employers should consider all time worked by a given employee in one workweek, without regard to which entity the work has been performed for, when calculating overtime.
For questions regarding joint employers or wage and hour issues, contact Lex Shvartsmann at 503-276-2111 or lshvartsmann@barran.com.