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State AGs sue to stop DOL joint-employer rule

Attorneys general from 17 states and the District of Columbia filed a lawsuit last week to stop the US Department of Labor’s new joint-employer rule.

“The new rule, which would result in lower wages and additional wage theft targeting lower- and middle-income workers, demonstrates that the Trump Administration does not care about the hardworking individuals that help this country run,” New York Attorney General Letitia James said in a statement.

The Department of Labor announced [1] the final rule in January, and it’s set to take effect March 16. It includes a four-factor test for determining joint-employer status where an employee performs work for one employer and that work benefits another. It’s separate from a joint-employer final rule discussed last week week by the National Labor Relations Board [2].

In the lawsuit announced Feb. 26, the attorneys general argued companies have increasingly outsourced employment of workers and that third-party employers are less stable and subject to less scrutiny. As a result, they are more likely to violate wage and hour laws, according to the attorneys general.

“Here in New Jersey, we have a strong stake in protecting the rights of workers and guaranteeing them redress for wage-and-hour violations. That is why it’s important for us to be part of today’s lawsuit,” New Jersey Attorney General Gurbir Grewal said.

The joint-employer standard determines when more than one employer is responsible under the Fair Labor Standards Act because both exert sufficient influence over a worker’s employment.

“Under the new administration rule, corporations can only be categorized as ‘joint employers’ — and therefore only be held liable for the actions of their subcontractors, franchisees or third-party managers — if it can be shown they have ‘direct control’ over the other companies’ policies,” according to the New Jersey Attorney General’s Office.