US: Joint Employer Ruling Struck Down by Court for Now

In March, the US Department of Labor (DOL) issued a final rule that narrows the situations where multiple employers share liability for paying their workers’ wages and complying with minimum wage requirements.

That ruling was challenged by 17 states and has recently been struck down by the US District Court for the Southern District of New York, arguing the regulation is “arbitrary and capricious” and inconsistent with the Fair Labor Standards Act. This means the old rule applies for now, and that companies will need to comply with it if they share responsibility for employment with other organizations.

The joint employer regulation defines the circumstances under which employers, such as a franchiser and its franchisee, are considered joint employers of a group of workers and therefore share responsibility for paying the minimum wage and overtime. The new DOL rule was designed to take some of the burdens off joint employers, but opponents argue it makes it easier for companies to commit wage violations and fails to protect employees sufficiently.

Takeaway: The DOL is challenging the courts on the ruling, and the outcome is uncertain. If your company engages workers through channels that could fall under the old definition of a joint employer, be sure to follow the progress of the ruling. A diligent workforce solutions partner can provide guidance regarding workers engaged through staffing partners or other potential relationships that may fall under the rule.

US: Joint Employer Ruling Struck Down by Court for Now

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