The U.S. Department of Labor announced, on September 20, 2021, the extension of the effective date of a final rule to rescind an earlier rule, “Joint Employer Status under the Fair Labor Standards Act,” that took effect in March 2020. The original Sept. 28, 2021, effective date of the rescission is now Oct. 5, 2021.
On March 12, 2021, the department issued a notice of proposed rulemaking proposing to rescind the March 2020 Joint Employer Rule. After reviewing the comments submitted in response to the Notice of Proposed Rulemaking, the department decided to finalize the rescission of the rule. The department believes that the rule narrowed the test for vertical joint employment improperly and conflicted with decades of department interpretation, the text of the Fair Labor Standards Act, and congressional intent.
The rescission will result in the removal and reserving of part 791 of Title 29 of the Code of Federal Regulations in its entirety. The department will continue to consider legal and policy issues relating to FLSA joint employment before determining whether alternative regulatory or sub-regulatory guidance is appropriate.
The FLSA requires covered employers to pay employees at least the federal minimum wage for every hour they work and overtime compensation at not less than one-and-one-half times their regular rate of pay for every hour they work over 40 in a workweek. A strong joint employer standard is critical because FLSA responsibilities and liability for worker protections do not apply to a business that is not the employee’s employer.