DOL Sends Proposed Joint Employer Rule to White House

Allen Smith, J.D. By Allen Smith, J.D. March 2, 2021
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The White House

​A new joint employer rule under the Fair Labor Standards Act (FLSA) is in the works. On Feb. 23, the U.S. Department of Labor (DOL) submitted a proposed rule on joint employer status to the White House for its review. We've gathered articles on the rulemaking from SHRM Online and other trusted media outlets.

Implications of Joint Employer Status

Under some circumstances, an employee of one company may be a joint employee of a second company, depending on the extent of control and supervision the second employer exercises over the employee. If the second company is a joint employer, both companies might be jointly liable for minimum wages and overtime pay under the FLSA. A company's staffing firms, subcontractors, franchisees or other affiliated companies might be joint employers.

(JD Supra)

Joint Employer Rule Issued Last Year

The DOL announced on Jan. 12, 2020, a final rule narrowing the definition of "joint employer" under the FLSA to provide clarity to businesses about franchise and contractor relationships. "The final rule, with practical examples provided in the text, provides a roadmap as to how an employer can structure relations with vendors to avoid joint employment wage and hour claims if under DOL scrutiny," said Michael Lotito, an attorney with Littler in San Francisco.

(SHRM Online)

Federal Judge Struck Down Major Parts of Rule

A federal judge in New York invalidated substantial portions of the DOL's joint employer rule on Sept. 8, 2020. The judge ruled in favor of a coalition of state attorneys general who claimed that the rule weakens critical workplace protections. Among other arguments, the coalition said the rule conflicts with the protections Congress intended to provide under the FLSA and that the DOL violated the Administrative Procedure Act's rulemaking process.

The Society for Human Resource Management (SHRM) supported the final rule. "While previous iterations were unclear, the DOL's final rule represented sound public policy that created a clearly defined standard benefiting workers and workplaces," said Emily M. Dickens, SHRM's corporate secretary, chief of staff and head of government affairs. "Now more than ever, businesses need clarity in addressing important workplace concerns without fear of running afoul of technical and outdated regulations on what constitutes a joint employment relationship. SHRM will continue to advocate for a joint employer standard which is clear, consistent and predictable."

(SHRM Online)

Decision Appealed

The Trump administration appealed the federal judge's decision to the 2nd U.S. Circuit Court of Appeals, filing a brief backing the rule's legality. The brief made it more difficult for the Biden administration to abandon defense of the rule through litigation but left open the option of rescission through new rulemaking. The Biden administration's proposed rule now awaits sign-off from the White House before its contents are made public.

(Bloomberg)

PRO Act Would Revise Definition of Joint Employer Under the NLRA

The Protecting the Right to Organize (PRO) Act would, if enacted, make many changes to labor law, including changing the definition of joint employer under the National Labor Relations Act (NLRA). The PRO Act's revision of the joint employer rule would subject franchisors to potential liability under the NLRA for actions taken by their franchisees. In conjunction with the PRO Act's expansive new definition of "employee," the new standard also would likely make employees of franchisees workers of the franchisor. Under the NLRA, a joint employer may be required to bargain with a union representing jointly employed workers, may be subject to joint liability for unfair labor practices committed by the other employer and may be subject to labor picketing that otherwise would be unlawful.

(JD Supra)

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