Great News for Small Business Contractors: DOL Rescinds Joint-Employer Rule

Date: June 19, 2017

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On June 7, 2017, the U.S. Department of Labor handed small business—especially those performing service agreements—a big win in rolling-back a controversial “joint-employer” guidance, used by the Obama administration to determine when two or more employers jointly employed an employee for purposes of the Fair Labor Standards Act, the federal wage and hour law.

This repeal is important not only in limiting small business wage and hour liabilities, but also in terms of ensuring fair and equitable rules. As we explained in a prior post, expanded joint-employer rules discourage larger companies from contracting with smaller firms, for fear that larger company will need to defend employment disputes for which they had no part.

NFIB believes that if Company A is hiring, firing, and making all the employment decisions with regards to an employee, that Company B should not be held responsible for Company A’s alleged employment law violations. Under DOL’s previous standard, Company B would only be deemed a joint-employer if it played a part in Company A’s employment decisions. But in rescinding the Obama administration’s manipulation of that historic standard, the Trump DOL restored the rule of law—at least with regards to the FLSA.

The Trump administration still has more work ahead in its quest to undo the most egregious regulatory changes unilaterally imposed—i.e., without Congressional approval—on the small business community, including a review of the National Labor Relations Board’s expanded joint employer rule. But in the interim, rest assured that NFIB Small Business Legal Center will defend deregulatory efforts. For more on our legal fights, check-out our recent post discussing our efforts to defend the President’s executive order calling for the elimination of two federal regulations for every new one promulgated.

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