The US Department of Labor on July 29 announced the anticipated final rule rescinding the Trump-era rule covering joint employment of workers such as between staffing firms and client companies.

“The rescinded rule included a description of joint employment contrary to statutory language and Congressional intent,” according to the department.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

The outgoing rule had established a four-factor test for determining joint-employer status, which made it more difficult for companies to be held liable as joint employers, Reuters reported.

The new rule states: 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.

“Joint employment is part of our longstanding federal labor laws,” said Wage and Hour Division Acting Administrator Jessica Looman. “The US Department of Labor’s Wage and Hour Division will continue to follow the law and judicial precedent when evaluating joint employer relationships to enforce worker protections.”

The new final rule takes effect Sept. 28.