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DOL Sets Rescission Date for Trump Administration’s Joint Employer Rule

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At the end of July, the Biden administration’s Department of Labor (“DOL”) issued a final rule, effective September 28, 2021, that will rescind the Trump administration’s “Joint Employer Status under the Fair Labor Standards Act” rule, first published in January 2020. If that name sounds familiar, that may be because the rule quickly faced legal challenges shortly after its inception. We also discussed the rule on multiple occasions, both following its publish date and again after its associated legal challenges.

Now that there is a final confirmation that the Trump administration’s joint employer guidance will be lifted, employers should not rely on those standards, even though it had arguably simplified compliance requirements for employers. It’s also worth noting that the DOL’s rescission did not propose any new guidance to replace the old rule, instead stating “the [DOL] will continue to consider legal and policy issues related to FLSA joint employment before determining whether alternative regulatory or subregulatory guidance is appropriate.”

Despite the noncommittal tone of this position, there are signs that the Biden DOL intends to make the expansion of worker classification standards, such as those applicable to joint employment relationships or independent contractor status, a priority for further review. Employers should not be surprised to see a notice of proposed rulemaking to implement new guidance on the joint employment standard sometime during this administration’s term. Additionally, it is fair to expect government enforcement actions, each based on a broader interpretation of joint employment arrangements than had been established by the soon-to-be rescinded rule, to become more common going forward.

Employers should use this final rule as an excuse to review their own classification practices for compliance with applicable laws. Such an exercise could help confirm that they are properly classifying individuals working on their premises or alongside their employees as either non-employees or joint employees as intended. This, in turn, could also mitigate risks associated with government action or lawsuits related to any unintended joint employment relationships, or ensure that the employer is benefiting from desired employment-related protections, such as workers’ compensation liability caps, as the case may be.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.