DOL's new joint-employer rule overturned by court

The U.S. Department of Labor's (DOL) long-awaited joint-employer rule was largely struck down on September 8, 2020, by a New York judge responding to challenges brought by 16 state attorneys general.

No other area of employment law has received so much attention or seen so many regulatory twists and turns as joint employment. Although the DOL's regulation was the first formal new rule since 1958, the joint-employer doctrine has been modified numerous times over the years. Most recently, in 2014 and 2016, the Obama administration changed the definition of "joint employer" via informal guidance when the Wage and Hour Division (WHD) issued administrator interpretations (AIs) stating it would look past employers' control over workers to the "economic realities" of the relationship. The WHD also set more ambiguous standards, such as whether an employer reserved but did not exercise certain rights. Significantly, that subregulatory guidance was withdrawn by the Trump administration and is no longer applicable.

The new DOL rule, which took effect March 20, was hailed in many quarters as bringing clarity and certainty to admittedly fragmented and often contradictory interpretations of joint employment. However, the rule was drafted in the midst of a storm of controversy stemming from the bitter dispute over the National Labor Relations Board's (NLRB) ruling on joint employment in the Browning-Ferris case and its tortured aftermath. As a result, whatever the DOL determined was certain to become part of the broader dispute.