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The Employer Handbook Blog
17 states have sued to stop the joint-employer rule. No, not yesterday’s joint-employer rule; the other one.
Image by Okan Caliskan from Pixabay
Is your head spinning? Ok, sit down. I’ll explain it.
Yesterday, I blogged about the National Labor Relations Board announcing its joint-employer rule. Under the Board’s new rule, a joint-employer relationship involves one business that possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees. You can read here all about that rule, which will take effect in April 2020.
The lawsuit.
Yesterday, the District of Columbia and 17 states, among them New Jersey, Pennsylvania, New York, and California, filed a federal complaint in the Southern District of New York to block the joint-employer rule. But, not yesterday’s Board-issued joint-employer rule.
No, I’m talking about the joint-employer rule that the U.S. Department of Labor (DOL) issued earlier this year in January. I blogged about those rules here. In the final rule, the DOL offered a four-factor balancing test for determining Fair Labor Standards Act joint-employer status in situations where an employee performs work for one employer that simultaneously benefits another entity or individual. The balancing test examines whether the potential joint employer:
- Hires or fires the employee;
- Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
- Determines the employee’s rate and method of payment; and
- Maintains the employee’s employment records.
So, what’s wrong with the DOL joint-employer rule?
According to the 18 plaintiffs, the DOL’s joint-employer rule “would impermissibly narrow the FLSA’s coverage,” “make[e] workers even more vulnerable to underpayment and wage theft,” and ultimately “violate the Administrative Procedure Act.” Specifically, the plaintiffs claim that the rule violates the APA because:
- it is inconsistent with the FLSA’s statutory text and remedial purpose;
- contravenes Supreme Court precedent;
- is arbitrary and capricious; and
- fails to consider and quantify adequately the harms that workers will suffer in terms of underpayment and stolen wages.
But, can the plaintiffs win?
The DOL rule takes effect next month, and presumably, the plaintiffs will seek injunctive relief block it. Unfortunately, I’m not much of an expert on the Administrative Procedure Act. But, this article from Ben Penn at Bloomberg Law indicates that the states must “may first have tackle questions about whether they have legal standing to sue.”
Whatever happens, I’ll keep you updated.