Congressman Tom Cole agrees with rule clarification

Image
  • Corley
    Corley
Body

Washington, D.C. – Congressman Tom Cole released the following statement after the U.S. Department of Labor (DOL) announced a final rule that replaces the misguided Obama-era policy related to the joint employer standard under the Fair Labor Standards Act (FLSA). The new guidance clarifies what qualifies as joint employment and prevents unnecessary penalties for employers, particularly for franchise owners.

“I am very pleased that the Trump Administration has moved to do away with a damaging regulation imposed on America’s small business job creators, particularly franchise owners. When small businesses are no longer crippled by red tape, they are indeed empowered to further drive the nation’s economic success and help more Americans secure a prosperous future.”

Cole has long advocated for changes to the DOL joint employer rule, including while he presided as Chairman of the House Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies (LHHS). As Chairman, he oversaw the inclusion of language in House versions of the annual LHHS appropriations bill that would prohibit the Obama Administration from implementing the rule. Cole currently serves as LHHS Ranking Member.

The final rule

On January 12, 2020, the Department of Labor (Department) announced a final rule to revise and update its regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA). The final rule provides updated guidance for determining joint employer status when an employee performs work for his or her employer that simultaneously benefits another individual or entity, including guidance on the identification of certain factors that are not relevant when determining joint employer status. The effective date of the final rule is March 16, 2020.

In the final rule, the Department:

• specifies that when an employee performs work for the employer that simultaneously benefits another person, that person will be considered a joint employer when that person is acting directly or indirectly in the interest of the employer in relation to the employee;

• provides a four-factor balancing test to determine when a person is acting directly or indirectly in the interest of an employer in relation to the employee;

• clarifies that an employee’s “economic dependence” on a potential joint employer does not determine whether it is a joint employer under the FLSA;

• specifies that an employer’s franchisor, brand and supply, or similar business model and certain contractual agreements or business practices do not make joint employer status under the FLSA more or less likely; and

• provides several examples applying the Department’s guidance for determining FLSA joint employer status in a variety of different factual situations.

Sarah Corley is the Director of Strategic Communications for Congressman Tom Cole (OK-04) | House Rules Committee.