The Labor Department released a proposal Monday that would limit claims against big companies for employment-law violations by franchisees or contractors.
The proposal, related to a concept called joint employment, seeks to define when, for example, employees of a locally owned McDonald's restaurant could successfully take action against McDonald's Corp. over violations of minimum-wage and overtime laws.
Franchisees and contractors can be small, poorly capitalized operations, which can complicate efforts to recover wages that were illegally denied. Instead, those efforts are often directed at large companies with whom those employers have relationships.
"This proposal will reduce uncertainty over joint employer status and clarify for workers who is responsible for their employment protections," Labor Secretary Alexander Acosta said in a statement.
The proposal is a sharp departure from the joint employer criteria that the Labor Department laid out in 2016 under President Barack Obama's administration. Under that guidance, a company like McDonald's could be held liable for minimum-wage violations committed by a franchisee even if it did not directly supervise workers or hire and fire them.
According to the new proposal, four factors are capable of establishing joint employment: whether the upstream company exercises the power to hire and fire employees; whether it supervises them and controls their schedules; whether it sets their pay; and whether it keeps up their employment records.
If a company doesn't engage in most or all of these activities, it is unlikely that it would be deemed a joint employer.
The proposal will require a 60-day public comment period before it can be finalized.
Business on 04/02/2019