FreedomWorks Foundation Submits Comments on Rescission of the Joint Employer Rule

Today, FreedomWorks Foundation submitted formal comments opposing the Department of Labor’s rescission of President Trump’s Joint Employer Rule. This proposed rule would remove Trump-era regulations under the Fair Labor Standards Act that updated and streamlined the standard for determining joint employer status.

The text of the formal comment can be found here, in the attachment at the bottom of this page, and excerpted directly below:

To determine whether joint employment exists, the updated standard relies on a four-factor balancing test drawn from leading court decisions and focusing on the degree of control a putative joint employer exercises over the employee. The rule was designed to reduce uncertainty for businesses in determining whether they are acting as joint employers, thus reducing compliance costs. It also clarified that a company could require its franchisees or subcontractors to adhere to certain standards (e.g., health and safety, quality) and require certain trainings (e.g., diversity, anti-harassment) without fear of being deemed a joint employer of the franchisee’s or subcontractor’s employees.

While a New York federal district court invalidated much of the rule, that decision is now on appeal to the Second Circuit Court of Appeals. Rather than waiting for that decision, however, the Department of Labor proposes rescinding the rule and replacing it with…nothing new. Rescinding this rule would return us to the 1958 vague “not completely disassociated” standard, the dramatic expansion of joint liability in the 2015 National Labor Relations Board ruling, and the 2016 interpretation that DOL adopted without public input (and which the 2020 rule repealed).

Rather than exacerbate the uncertainty surrounding questions of joint employment–and short-circuiting the appeals process–the better course would be for DOL to leave the 2020 rule in place until the Second Circuit rules. Once that decision comes down, DOL can then proceed to eliminate or rewrite the Joint Employment rule through notice and comment. This will reduce costs for employers and ultimately benefit employees and the public when compliance resources are otherwise used for job creation, increasing wages, and enhancing benefits.