by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The White House has formally rolled back one of the Obama administration’s most ambitious attempts to rewrite federal labor law to benefit unions, the so-called joint employer rule.
The Trump administration on Sunday said that businesses shouldn’t be held liable for violations by other companies if all they share is a corporate brand.
The Obama administration had sought to make franchiser corporations such as McDonald’s legally responsible for workplace violations by their franchisees, even if the latter were legally independent businesses. The previous administration based this on the theory that a corporation was a “joint employer” with the other company even if the former only had “indirect control” over the latter company’s policies.
Trump administration has been working to roll back the “joint employer” rule since President Trump took office. The Labor Department on Sunday issued an official rule that corporations were only liable when they had “direct control” over the other company’s policies. The administration clarified that to be joint employers, both businesses had to be able to: hire or fire an employee; have control over their work schedule; control the workers’ pay; and maintain the workers’ employment records.
“This final rule furthers President Trump’s successful, government-wide effort to address regulations that hinder the American economy and to promote economic growth,” said Labor Secretary Eugene Scalia. The rule will go into effect in 60 days.