The Department of Labor on Jan. 12 promulgated its final rule on Joint Employer Status under the Fair Labor Standards Act. The 164-page final rule consolidates a four-factor balancing test introduced in the April 2019 proposed rule, and it will be published in the Federal Register on Thursday, Jan. 16.
This is a very positive development for NATSO members, and it is a recognition by the DOL of the legitimacy of many different types of business arrangements. In franchising alone, IFA commissioned research last year that found the expanded, Obama-era joint employer standard has cost franchise businesses over $30 billion each year and led to a 93 percent increase in lawsuits.
This rulemaking is the culmination of significant advocacy. In Fall 2018, the Coalition to Save Local Business, of which NATSO is a member, and its allies helped organize a Senate letter (led by former Sen. Johnny Isakson and signed by 26 senators) and a bipartisan House letter (led by Rep. Bradley Byrne and signed by 84 House members) to the DOL in Fall 2018 urging the development of a joint employer rulemaking under the FLSA. Among the letters’ signatories were Majority Leader McConnell (R-KY) and Majority Whip Thune (R-SD), and Democratic Reps. Scott Peters (D-CA) and Henry Cuellar (D-TX).
The rule is also consistent with the language in the House-passed Save Local Business Act from last Congress. The four-part test in both the rule and legislation originated from the 1983 Ninth Circuit decision in Bonnette v. California Health and Welfare Agency.
NATSO anticipates the NLRB will issue a final joint employer rule in the coming days, and the EEOC has also indicated interest in a joint employer rule.
The final DOL joint employer rule is expected to quickly face litigation and pushback from several labor groups.
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