April 12, 2021
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor
200 Constitution Avenue NW
Washington, D.C. 20210
Re: Rescission of Joint Employer Status Under the Fair Labor Standards Act Rule (RIN 1235-AA37)
Dear Ms. DeBisschop,
The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers, and assesses policies with respect to how well they further those goals. EPI submits these comments on the Department of Labor’s (DOL) request for comment on rescission of the final rule entitled “Joint Employer Status Under the Fair Labor Standards Act” (Joint Employer Rule).
The Fair Labor Standards Act is our nation’s fundamental worker protection statute, providing wage and hour protections to the vast majority of U.S. workers. It was drafted broadly, creating employer coverage to ensure that companies that use staffing, temp, or subcontractors in their business operations are held accountable for complying with the FLSA’s basic provisions, including minimum wage, overtime, and child labor protections. The Joint Employer Rule made it nearly impossible for many workers to enforce these rights and took away the ability of many workers to recover unpaid wages from firms who use contractors in their work. As a result, the Joint Employer Rule is contrary to the statute, contrary to precedent, and projected to cost workers billions annually.
The Joint Employer Rule substantially limited shared liability for wage and hour violations, making it harder for workers to hold all parties who set their terms of employment accountable. EPI estimated the Joint Employer Rule would cost workers more than $1 billion annually—more than $954.4 million due to wage suppression from an increase in workplace “fissuring” and more than $138.6 million from wage losses due to an increase in wage theft by employers.1 It’s worth stating that EPI’s analysis was used in the decision of the federal judge that struck down the “vertical” joint-employment provisions in the Joint Employer Rule,2 which noted that the Department of Labor failed to adequately consider the cost of workers.3 Further, the Department of Labor’s recognizes the lack of consideration of the costs to workers as a reason for rescinding the Joint Employer Rule.4
In addition to flawed economic analysis, the Joint Employer Rule was based on flawed legal analysis. The FLSA is a uniquely broad statute not constrained by common-law employment relationships. The Joint Employer Rule’s narrow definition of who is responsible as an employer is contrary to the plain language of the statute’s definition of “employ” contained in Section 203(g) of the FLSA. It is also contrary to U.S. Supreme Court precedent that has said the definition of employ is not based in common law concepts and applied Section 203(g) to determine that multiple entities are the employers of a group of employees. And it runs afoul of the majority of federal circuit courts that have considered the scope of covered employers. Finally, it is contrary to the intent of the FLSA, because it will enable employers to insert labor intermediaries between their company and their workers and then walk away from any accountability for the child labor, minimum wage and overtime violations that may occur.
EPI strongly urges the Department of Labor to rescind the Joint Employer Rule. We believe the Department’s analysis of the Joint Employer Rule was based on a flawed economic and legal analysis, and its impact on working people will be negative and significant. For these reasons, the Joint Employer Rule should be rescinded.
Senior Economist and Director of Policy
Economic Policy Institute
Economic Policy Institute
1. Celine McNicholas and Heidi Shierholz, “EPI Comments Regarding the Department of Labor’s Proposed Joint-Employer Standard,” comments submitted on behalf of Economic Policy Institute to U.S. Department of Labor, June 25, 2019.
2. Heidi Shierholz, “EPI Applauds Judge’s Decision on Joint-Employer Rule” (statement), Economic Policy Institute, September , 2020.
3. 87 Fed. Reg. at 14045
4. 87 Fed. Reg. at 14045