Joint Employer – Trump Rolls Back Obama Regulation

In a victory for business interests, including the linen, uniform and facility services industry, the administration of President Donald Trump recently issued a rollback of a restrictive rule on joint employers that was enacted by his predecessor, President Barack Obama, according to news reports.

On Jan. 12, the U.S. Department of Labor issued a rewrite of the Joint Employer Rule, the reports said, noting that the effort to revise the regulation had begun when Trump took office three years ago. Their reason was that the courts shouldn’t hold businesses liable for labor law violations by other companies in cases where the only thing they share is a corporate board.

For its part, the Obama administration had sought to make franchiser corporations like McDonald’s, legally liable for workplace violations by its franchisees, even if the latter were independent businesses. The Obama administration’s theory was that a corporation was a joint employer with another company in cases where any one company exercised “indirect control” over the other company’s policies.

The Trump administration countered that only when a company has direct control over another company’s policies should courts have the ability to hold the two companies jointly liable for labor-law violations. Specifically, the Trump administration said that to qualify as joint employers, two companies must have equal control over the hiring and firing of employees, the establishment of work schedules, the determination of pay levels and control of employment records.

Business groups, including TRSA, applauded the rule change, noting that Obama-era regulation had threatened to push companies out of franchising. Labor groups had favored the Obama interpretation of the joint employer rule because they believed it would help unions in their efforts to organize franchise businesses. Click here for details.