Joint Employer Rule Struck Down

Last week, a federal judge in the Southern District of New York struck down most of a U.S. Department of Labor rule that limited when multiple businesses may be liable to the same worker under federal wage law, the so-called "joint employer rule." The decision undoes one of the Trump Administration key reforms of federal labor policy and is the latest chapter in the ongoing struggle over the reach of the Fair Labor Standards Act into critical areas of the economy such as franchising and businesses that utilize contract labor or staffing agencies.

The DOL issued the new rule in January of this year imposing a four-factor test for determining whether two or more businesses may be deemed as the employer for the same worker and liable under the Fair Labor Standards Act. The four-factor test limited joint employer liability to situations where the alleged employer actually exhibited control over an alleged employment relationship through things like hiring and firing,