Amy DeBisschop
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue NW
Washington, D.C. 20210
Comments on RIN 1235-AA37: Rescission of Joint Employer Status Under the Fair Labor Standards Act
Dear Ms. DeBisschop:
On March 12, 2021, the Department of Labor (“Department” or “DOL”) published Rescission of Joint Employer Status Under the Fair Labor Standards Act, RIN 1235-AA37 (“notice”), which seeks comments on DOL’s proposal to rescind the final rule interpreting joint employment under the Fair Labor Standards Act (“joint employer rule”).
The National Employment Lawyers Association (“NELA”) supports the Department’s proposed rulemaking to rescind the joint employer rule because it is contrary to the express terms and purposes of the Fair Labor Standards Act (“FLSA” or “the Act”). The rule, struck down by a federal court in large part, ignores a statutory definition, Supreme Court authority, and decades of federal Circuit Court precedent with a test that would encompass almost no subcontracting companies, and would especially hurt those low-wage workers who need the protections of the FLSA the most: those who are placed in jobs via temp or staffing agencies, and those, including children, who work in heavily contracted janitorial, construction, agricultural, manufacturing, and warehousing jobs, to name a few.
Importance of joint employer responsibility to NELA and our members.
NELA is the largest professional membership organization in the country comprised of lawyers who represent employees in labor, employment, wage and hour, and civil rights disputes. Our mission is to advance employee rights and serve lawyers who advocate for equality and justice in the American workplace. NELA and its 69 circuit, state, and local affiliates have a membership of over 4,000 attorneys who are committed to working on behalf of those who have faced illegal treatment in the workplace. NELA has filed numerous amicus curiae briefs before the United States Supreme Court and other federal appellate courts regarding the proper interpretation of federal civil rights and worker protection laws and comments on relevant Notices of Proposed Rulemaking (NPRMs). NELA also engages in legislative advocacy on behalf of workers throughout the United States. NELA members represent thousands of workers from around the country in wage theft cases in every state and circuit, which provides NELA with an important and insightful perspective on how issues regarding joint employment impact workers across the country. NELA members also have the experience to comment on the adverse impact the Department’s current joint employer rule.
In today’s economy, more and more corporations in lower-wage industries outsource to labor contractors and use labor intermediaries such as staffing firms and other subcontractors, and this can result in degraded working conditions and a lack of employer responsibility.[1] Companies that outsource their labor must share responsibility for any child labor, wage theft, and overtime violations that occur in their business. When operating correctly, joint employment results in better overall protections for workers and ensures fair competition among businesses.
To take one example: employers increasingly use temp or staffing agencies to recruit and hire their workers. The number of workers getting a job via a temporary staffing agency has increased dramatically in recent years, especially in low-wage, “blue-collar” occupations. There are currently 3.1 million workers employed through temporary staffing agencies, and the aggregate number of hours and total number of jobs (part-time and full-time)—has grown faster than work overall.[2] Temporary and staffing work has increased in low-wage, “blue-collar” occupations in particular, reflecting a shift in companies using temp and staffing placements in clerical work to more hazardous industries, such as construction, manufacturing and logistics.
Workers employed through intermediaries like temporary and staffing agencies earn less money and endure worse working conditions than permanent, direct-hires. Full-time staffing and temporary help agency workers earn 41 percent less than do workers in standard work arrangements.[3] They also experience large benefit penalties relative to their counterparts in standard work arrangements.[4] In addition, staffing and temporary agency workers typically work in more hazardous jobs than permanent workers, and yet they often receive insufficient safety training and are more vulnerable to retaliation for reporting injuries than workers in traditional employment relationships.[5]
If workers don’t know who their responsible employer is, work conditions are more likely to deteriorate: pay declines, wage theft increases, and workplace injuries rise. And outsourced jobs pay less—sometimes as much as 40 percent less than in-house jobs. In today’s economy, we should be looking for ways to increase workers’ pay and economic security, not laying the groundwork for more sweatshops.
Strong joint employer language and protections are important, for instance, to low wage workers in the garment, slaughterhouse, and other industries where labor brokers can readily cease doing business rather than face a lawsuit or Department investigation. See, e.g., Zheng, 355 F.3d at 64 (stating contractor defendants in garment industry ceased doing business or could not be located); Rutherford Food Corp., 331 U.S. at 725 (labor brokers who supervised boners for slaughterhouse were individuals and varied over time); see also Reyes, 495 F.3d at 408 (finding seed corn company responsible for workers hired, recruited, and supervised by labor broker to detassel corn plants, considering additional factors such as that detasseling was a specialty job, contractor put together crew for company alone and business unit did not shift, and company supplied tools).
The use of labor brokers by some general contractors in the construction industry has not only created an uneven playing field for general contractors who work with legitimate subcontractors who pay their employees correctly and fairly but has also resulted in unsafe job sites (due to no worker’s compensation insurance responsibility by the broker). Furthermore, the outsourcing of the workforce to labor brokers has fostered illegal trafficking of construction workers. See, e.g., http://www.fox9.com/news/charges-twin-cities-contractor-used-undocumented-workers-committed-insurance-fraud. Strong joint employer laws help ensure general contractors pay attention to how these workers are being treated. Recognizing that more than one employer can employ a worker improves compliance by ensuring that corporations cannot skirt the law simply by outsourcing responsibility for their workers.
The rule is contrary to the FLSA’s broad “suffer or permit” standard, Supreme Court authority, and the statutory intent of the Fair Labor Standards Act.
Labor and employment laws, including the FLSA, have long held that more than one entity can be the employer of a worker. When more than one employer is found responsible, jointly with another, companies provide better oversight of working conditions, to ensure that child labor, minimum wage and overtime rules are followed. The FLSA’s definitions of covered employment and employers have not changed since the Act was enacted, and companies have been operating under these rules for over 80 years.
FLSA is a uniquely broad statute not constrained by common-law employment relationships. The 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 Act. 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. This will further degrade fair pay standards in these industries.
Even under the more restrictive common-law employment test, the DOL’s rule is too narrow: it fails to consider the right to control, a cornerstone of common-law employment determinations under long-standing Supreme Court and FLSA law; It fails to consider instances where two companies share control over important terms and conditions of work, and it also states that it does not consider the “suffer or permit to work” definition of “employ” that is the cornerstone definition in the statute upon which the employment coverage definitions rely.
The incredibly narrow test leaves out many work relationships that are well within the long-understood scope of the FLSA’s employment relationship, and is thus impermissibly contrary to law and the Act. For these reasons, the rule is arbitrary and capricious, lacks a rationale based in the statute, and could permit employers of low-income workers to skirt responsibility. New York v. Scalia, 2020 WL 5370871, No. 1:20-cv-1689-GHW (S.D.N.Y. Sept. 8, 2020).
Corporations that engage low-road contractors and then look the other way gain an unfair advantage over companies that play by the rules, resulting in a race to the bottom that rewards cheaters. This is one reason why the job quality of what were formerly middle-class jobs in America is suffering today.
For these reasons, we support the Department’s proposal to rescind the rule. NELA thanks the Department for its attention to and consideration of NELA’s views on these issues. If you have questions or wish to discuss these matters, please contact Laura Flegel at lflegel@nelahq.org.
Sincerely yours,
Laura M. Flegel
National Employment Lawyers Association
Director of Legislative & Public Policy
[1] America’s Nonstandard Workforce Faces Wage, Benefit Penalties, According to U.S. Data, NELP, June 7, 2018, available at https://www.nelp.org/news-releases/americas-nonstandard-workforce-faces-wage-benefit-penalties according-us-data/.
[2] NELP analysis of Current Employment Statistics, NAICS 561320, available at https://www.bls.gov/ces/data.htm.
[3] America’s Nonstandard Workforce Faces Wage, Benefit Penalties, According to U.S. Data, National Employment Law Project, June 7, 2018, available at https://www.nelp.org/news-releases/americas-nonstandard-workforce-faces-wage-benefit-penalties-according-us-data/.
[4] Id.
[5] Rebecca Smith & Claire McKenna, Temped Out: How the Domestic Outsourcing of Blue-Collar Jobs Harms America’s Workers, June 10, 2014, at 11, available at -Out.pdf.
