Rule to Nix Trump Joint Employer Test Clears White House Review

July 14, 2021, 3:39 PM

A U.S. Labor Department final rule to repeal a business-friendly Trump administration standard that shielded companies from shared liability for wage violations was cleared by the White House, signaling its imminent release.

The White House Office of Information and Regulatory Affairs concluded its review of the measure to rescind the joint employer rule, according to an online notice Wednesday, the last step before DOL can publish it.

Precise timing for publication in the Federal Register wasn’t immediately clear. Once released, the measure would cement the Biden administration’s rollback of a signature Trump-era initiative aimed at giving corporations more clarity on how they can assert influence over their affiliated businesses, such as franchisees or subcontractors, without assuming responsibility over their payroll operations.

Discarding the Trump standard would facilitate a return to the Obama administration’s approach, when DOL increased its investigations and lawsuits alleging a lead employer shared liability over workers at affiliated entities.

President Joe Biden’s top wage enforcer, Jessica Looman, has already highlighted the importance of reviewing potential joint-employer relationships when policing businesses for minimum wage and overtime violations.

The most significant parts of the Trump joint-employer standard were set aside by a federal judge last year, in a case now before the U.S. Court of Appeals for the Second Circuit. Business groups have intervened in the litigation in an effort to preserve the rule amid the new administration’s attempt to undo it.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Travis Tritten at ttritten@bgov.com; Andrew Harris at aharris@bloomberglaw.com

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