Labor Department Rescinds Joint-Employer Guidance

On June 6, the U.S. Labor Department retracted a standard established under the Obama administration for determining whether companies are responsible as “joint employers” for working conditions of people employed by franchisees, temp agencies, and other contractors. It also rescinded guidance stating that companies often deprive workers of protections by classifying them as independent contractors when they are actually employees.

Last year, the Labor Department issued guidelines that interpreted broadly the meaning of “joint employment,” where two or more employers share responsibility for ensuring that workers are paid the minimum wage and overtime. That followed a 2015 guidance noting that often workers who are treated as independent contractors actually are employees who are entitled to an array of wage and hour protections.

Shannon Meade, the NRA’s director of labor and workforce policy, said in a statement that it was “a positive step in the right direction. However, we will continue to work with the Department of Labor as well as Congress on the previous administration’s controversial joint employer standard.”

Rob Green, executive director of the National Council of Chain Restaurants, said the withdrawal of the guidance was “a common-sense response to ill-advised and unhelpful policy.” 

“Rescinding the joint-employment policy will provide chain restaurant owners with more clarity about the Labor Department’s position moving forward,” Green said in a statement. “We look forward to additional administrative action from the National Labor Relations Board and a legislative response from Congress to fix the broader problems created when the new standard was created by the NLRB.”