Hassan A. Kanu
Posted June 26, 2019, 10:31 AM

• Presidential contenders oppose rulemaking
• Blue state attorneys general join opposition; franchise group in support

Six of the seven senators running for the Democratic presidential nomination in 2020 voiced their “strong opposition” to the Labor Department’s proposal to narrow liability for franchised businesses and companies that rely on temps and other contractors. “The proposed interpretation would violate the language and intent of the Fair Labor Standards Act (FLSA) and weaken the enforcement of wage-and-hour protections on behalf of many of the most vulnerable workers in the country, directly contradicting DOL’s mission,” Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Cory Booker (D-N.J.), Kamala Harris (D-Calif.), Kirsten Gillibrand (D-N.Y.), Amy Klobuchar (D-Minn.), and several other Democratic heavyweights said in a June 25 letter to Labor Secretary Alexander Acosta.

The DOL proposed a new joint employer regulation-or interpretive rule-in April, seeking to narrow the circumstances when multiple companies can be considered “joint employers” of a group of workers. The Obama administration had looked to expand the scope of joint employer liability. The DOL said in April that its new proposal would reduce uncertainty about which businesses are responsible for workers’ employment protections and any associated liability for violating labor laws.

“As the prevalence of contracting, temporary staffing, and franchising arrangements has ballooned throughout the American economy, it is increasingly important that companies that share responsibility for workers are held liable for wage theft, child labor abuses, and other violations of federal wage-and-hour law that too often devastate the financial security of working families,” the senators wrote, noting that the 3-million temp-worker contingent across the country is “disproportionately made up of African American and Latino workers earning significantly less than other groups.

The joint employer issue is a flashpoint for franchised and gig economy companies and worker advocates. The comment period on the joint employer proposal ended June 25. The DOL’s proposal also drew attention from a group of Democratic attorneys general and the largest business association in the franchise sector, the International Franchise Association. The IFA argues that long-accepted practices in franchising shouldn’t be considered evidence of joint liability.

“The Department of Labor has put forward a rule that can add much-needed clarity for franchise businesses,” IFA Senior Vice President of Government Relations Matt Haller said in a June 25 announcement. “An expanded joint employer standard has cost the economy billions and slowed down hiring and job growth-this rule is a major step toward righting that wrong.”

Officials from 18 states including New York, California, North Carolina, Wisconsin, Pennsylvania, and the District of Columbia wrote to Acosta to oppose the rulemaking. “The experiences of many of the undersigned state Attorneys General (“State AGs”) in enforcing labor laws and protecting workers argue strongly against adopting the Proposed Rule,” the prosecutors wrote. “Based on our collective experience, we believe that the Proposed Rule does not adequately reflect today’s workplace relationships, in which growing numbers of businesses are changing organizational and staffing models by outsourcing functions to third” parties.”

The DOL regulation is considered an interpretive rule because Congress hasn’t directly authorized the agency to define joint employment. Critics have suggested the eventual policy will be subject to legal challenges.

The letter from Congress also was signed by Sherrod Brown (D-Ohio); Patty Murray (D-Wash.); Maggie Hassan (D-N.H.); Dick Durbin (D-Ill.); Ben Cardin (D-Md.); Chris Van Hollen (D-Md.); Tammy Baldwin (D-Wis.); and Ron Wyden (D-Ore.).

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