The Department of Labor (DOL) released a proposal Monday to roll back Obama-era policies that left franchisers confused to the extent they could interact with their partner franchisees, The Washington Free Beacon reported.
The DOL proposal would codify the definition of a “joint-employer” as two companies with direct control over how an employee is treated and paid. The Obama administration had implemented policies that widened the joint-employer definition to include businesses not directly involved with the day-to-day management of employees. (RELATED: A Pro-Union Labor Board Ruling Is An ‘Industry -Wide’ Drag On Hotel Employees’ Wages, Study Says)
The Obama precedent concerned many in the franchise industry that workplace violations committed by individual franchisees could be used to influence or punish major corporations. For example, a union could use workplace violations at one franchisee to organize the corporation above it, though the corporate franchiser was not directly involved in the abuse.
“This proposal will reduce uncertainty over joint employer status and clarify for workers who is responsible for their employment protections,” Labor Secretary Alexander Acosta said in a statement. “Providing public notice and comment is the best way to move forward with another significant deregulatory proposal.”
The DOL’s proposal institutes a four-part test to determine whether two businesses can be classified as joint-employers over a single employee. The joint-employer rule applies to companies that both have the ability to hire or fire the employee, control the employee’s work schedule or conditions of employment, determine the employee’s pay and are legally obligated to handle the employee’s employment records.
Critics say the proposal is too narrow and will allow companies to get away with unfair or abusive labor practices.
“It sends the message to companies that outsource or use contractors that they might be off the hook,” National Employment Law Project general counsel Catherine Ruckelshaus told The Wall Street Journal. “The Labor Department won’t be coming after them for violations of minimum-wage or child-labor laws.”
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