The Department of Labor on Jan. 12 promulgated its final rule on Joint Employer Status under the Fair Labor Standards Act. The 164-page final rule consolidates a four-factor balancing test introduced in the April 2019 proposed rule, and it will be published in the Federal Register on Thursday, Jan. 16.
This is a very positive development for NATSO members, and it is a recognition by the DOL of the legitimacy of many different types of business arrangements. In franchising alone, IFA commissioned research last year that found the expanded, Obama-era joint employer standard has cost franchise businesses over $30 billion each year and led to a 93 percent increase in lawsuits.
This rulemaking is the culmination of significant advocacy. In Fall 2018, the Coalition to Save Local Business, of which NATSO is a member, and its allies helped organize a Senate letter (led by former Sen. Johnny Isakson and signed by 26 senators) and a bipartisan House letter (led by Rep. Bradley Byrne and signed by 84 House members) to the DOL in Fall 2018 urging the development of a joint employer rulemaking under the FLSA. Among the letters’ signatories were Majority Leader McConnell (R-KY) and Majority Whip Thune (R-SD), and Democratic Reps. Scott Peters (D-CA) and Henry Cuellar (D-TX).
The rule is also consistent with the language in the House-passed Save Local Business Act from last Congress. The four-part test in both the rule and legislation originated from the 1983 Ninth Circuit decision in Bonnette v. California Health and Welfare Agency.
The final DOL joint employer rule is expected to quickly face litigation and pushback from several labor groups.
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