by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The Department of Labor is weighing taking steps to roll back an Obama-era policy that targeted franchise businesses.
In 2017 Labor Secretary Alex Acosta reversed a 2016 department interpretation that aimed to hold parent companies liable for workplace violations committed by franchisees or sub-contractors—a reversal of the traditional approach to determining joint employment. The Department is now seeking approval for a regulation that would cement the old rules, which only hold parent or franchise corporations accountable if they played a direct role in the violation. Labor experts say this could prove to be less easily reversed.
Steve Bernstein, a labor attorney at Fisher Phillips, said the Obama administration guidance only delivered an interpretation of labor law to expand joint employer. Interpretations can be reversed with relative ease, as Acosta demonstrated when he withdrew the 2016 document, but regulations could be harder for future administrations to undo. Regulatory action would provide more certainty to employers and workers moving forward by drawing a bright line between which party will be held liable for an alleged violation, according to Bernstein.
“At least in the short-term, a rule that returns to the traditional doctrine will lend more certainty with respect to a DOL standard that has stood the test of time from one administration to the next—thereby freeing business entities (particularly those that rely to some extent on a contingent workforce) to engage in more reliable strategic planning and assessment,” Bernstein said. “Businesses and stakeholders are hoping that it will lend clarity to an increasingly murky landscape for all parties involved when it comes to assessing the prospect of joint employer status.”