U.S. LABOR DEPARTMENT “JOINT EMPLOYER” RULE STRUCK DOWN
October 21, 2020
On September 8, 2020, the U.S. District Court for the Southern District of New York invalidated most of a U.S. Department of Labor (DOL) rule which sought to restrict when multiple linked businesses are held liable to the same worker under federal wage law. The court found that the rule conflicted with the broad definitions of the Fair Labor Standards Act, and furthermore, that the DOL failed to adequately justify its departure from the prior administration’s interpretations and to account for some of the final rule’s important costs. The rule, issued in January 2020, was a key plank of the Trump administration’s workplace policy platform. The Court vacated the portion of the rule applying to “vertical” employment relationships, in which workers for a staffing company are contracted to another company. However, the court stood by the portion applying to “horizontal” relationships, in which a worker is employed by two “sufficiently associated” businesses.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Andy Orr (aorr@eckertsemans.com or 202-659-6625).
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