U.S. DOL Announces Final Rule to Rescind 2020 Joint Employer Rule

The United States Department of Labor announced a final rule to rescind an earlier rule, “Joint Employer Status under the Fair Labor Standards Act” that took effect in March 2020. By rescinding that rule, the Department will ensure more workers receive minimum wage and overtime protections of the Fair Labor Standards Act (FLSA).

The rescinded rule included a description of joint employment contrary to statutory language and Congressional intent. The rule also failed to take into account the department’s prior joint employment guidance. The U.S. District Court for the Southern District of New York vacated most of the rule in 2020.

Under the FLSA, an employee can have more than one employer for the work they perform. Joint employment applies when – for the purposes of minimum wage and overtime requirements – the department considers two separate companies to be a worker’s employer for the same work. For example, a joint employer relationship could occur where a hotel contracts with a staffing agency to provide cleaning staff, which the hotel directly controls. If the agency and the hotel are joint employers, they are both responsible for worker protections.

A strong joint employer standard is critical because FLSA responsibilities and liability for worker protections do not apply to a business that does not meet the definition of employer.

The final rule becomes effective Sept. 28, 2021.