“This proposal will reduce uncertainty over joint employer status and clarify for workers who is responsible for their employment protections,” the labor secretary, Alexander Acosta, said in a statement.
The proposal is a sharp departure from the joint-employer criteria that the Labor Department laid out in 2016 under the Obama administration. Under those guidelines, a company like McDonald’s could be held liable for minimum-wage violations committed by a franchisee even if it did not directly supervise workers or hire and fire them. Exerting some forms of indirect control — like providing software or developing policies on which a franchisee relies — could make the larger corporation liable.
The Obama Labor Department also argued that corporations could be joint employers even without exercising control over a franchisee or contractor, simply because the smaller companies were economically dependent on them — for example, because the “upstream” company at the top of the supply chain provided facilities and handled payroll for a contractor.
The new proposal substantially restricts the situations in which a franchiser like McDonald’s would be considered liable. In an example laid out by the Labor Department, a global hotel brand would not be held liable for minimum-wage and overtime violations that a local franchisee committed, even if the franchisee relied on a variety of material provided by the hotel chain, such as sample employment applications and sample employee handbooks.
“Through this proposal, the Department of Labor has the chance to undo one of the most harmful regulatory actions from the past administration and replace it with a rule that creates certainty for America’s 733,000 franchise businesses,” Matthew Haller, a senior vice president at the International Franchise Association, said in a statement.
Article source: https://www.nytimes.com/2019/04/01/business/economy/labor-department-joint-employer.html?partner=rss&emc=rss
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