After a slow start, President Trump’s labor department is now firing on all cylinders. One of its first targets? The very definition of what constitutes an employer.
Last week, the Department of Labor (DOL) announced that it had rolled back the Obama administration’s interpretation of a “joint-employer,” or a company that employs franchise workers and contractors. Under old guidance, a corporation—like a fast food chain, for example—could be made liable for labor violations at franchise locations. As long as workers were “economically dependent” on the corporation, they could hold it accountable for unpaid overtime, unsafe working conditions, and more. Even if the corporation wouldn’t normally exercise control over those employees, simply having the capacity to do so would have warranted the joint-employer tag.
With the rollback of the guidance, the DOL’s current interpretation follows the traditional or localized employment standard, where the employer is only the party with “direct and immediate” day-to-day control over employees. Secretary of Labor Alex Acosta voiced support for this model during his confirmation hearings earlier this year.
Though the move marks a shift in attitudes at the DOL, it is not yet legally binding. For now, it only marks a change in enforcement priorities at the agency. The National Labor Relations Board (NLRB), another government agency that can investigate workplace violations, has its own interpretation of what constitutes a joint-employer:
“The Board may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms or conditions of employment.”
That definition aligns closely with the Obama administration’s. The NLRB’s position may change soon enough, as the five member body has two empty seats—positions that are appointed by none other than the president.
Andy Przystanski is Content Marketing Manager at Namely, the all-in-one HR, payroll, and benefits platform built for today's employees. Connect with Andy and the Namely team on Twitter, Facebook, and LinkedIn.
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