On July 29, the U.S. Department of Labor announced a final rule to rescind the 2020 Joint Employer Status under the Fair Labor Standards Act rule, which goes into effect on Sept. 28, 2021.
An analysis written by ABC National’s general counsel Littler Mendelson states, “Courts are now likely to return to the application of various, and not always consistent, multi-factor tests derived from the cases interpreting the Department’s outdated 1959 standard. This in turn means less certainty for employers as to when they may be liable for wage and hour violations under the FLSA as a “joint employer” of an unrelated company’s employees.”
ABC released the following statement on DOL’s rescission of the 2020 final rule, “While we certainly saw this coming, it is still disappointing that the Biden administration rescinded the 2020 joint employer final rule,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “ABC supported the prior final rule because it promised to bring additional clarity to a confusing area of the law, help alleviate unnecessary barriers to and burdens on contractor and subcontractor relationships throughout the construction industry, reduce needless litigation and encourage innovation in the economy.”
The 2020 joint employer final rule promised to make the joint employment test narrower and more focused and went into effect on March 16, 2020. In February 2020, 18 states sued DOL in federal court to strike down its joint employer final rule, and in September 2020, a U.S. District Court for the Southern District of New York judge ruled that parts of the final rule were illegal.
A business coalition that includes ABC intervened in the case, in part to defend the construction industry against unwarranted attacks by the state plaintiffs on the industry’s long-established methods of doing business. The case is currently on appeal to the Second Circuit Court of Appeals.