The Trump administration recently loosened labor law protections by making it more difficult for franchise employees to sue corporations for wage theft under the joint employer rule. Those who work for subcontractors and staffing agencies will have a tougher time securing legal remedy for labor law violations. The new rule issued by the Department of Labor also makes it more challenging to prove that a corporation is responsible for the labor law violations committed by franchise owners and contractors.
The new rule, which is no surprise having been on the table since last April, are enacted under the administration’s supposition that reducing corporate regulation will stimulate economic growth. It’s been praised by business groups, but worker advocates and unions sharply oppose it.
Central to this rule was the question of whether a corporation can be considered the “joint employer” of a worker for a franchise. There have been numerous cases wherein large companies have been sued for labor law violations – including wage theft – that was committed by the owner of a franchise. What this rule does is set a higher standard for “joint employer.” As our Los Angeles wage theft lawyers can explain, the new rule stipulates that companies are considered joint employers only if they:
- Set pay
- Maintain employment records