DOL Rescinds Joint Employer Standard

You may remember that last year, during the Trump Administration, the Department of Labor (DOL) substantively updated its regulations to adopt a new joint employer test for the Fair Labor Standards Act (FLSA). That business-friendly rule has now been rescinded by the DOL’s new leadership.

The DOL states: “The rescinded rule included a description of joint employment contrary to statutory language and Congressional intent. The rule also failed to take into account the department’s prior joint employment guidance.” Although the DOL further cites to a 2020 ruling by a New York federal court which found the rule in conflict with the FLSA, that decision was appealed and is pending before the Court of Appeals for the Second Circuit.

The rescission becomes effective on September 28, 2021. While it is not clear whether the DOL will propose and adopt a different joint employer rule, it is clear that this move creates uncertainty for employers at a difficult time. Businesses that use other companies, vendors, or contractors to assist them with their employees should exercise caution and consult with counsel about the nature of these relationships. 

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.