I have previously written about joint employers. See my posts here and here. TheTrump administration tried to make it harder to show a joint employer relationship. It adopted an interpretive regulation which the DOL thought would make it harder to prove joint employers. But, the court in State of New York v. Scalia, No. 20-cv-01689 (S.D. N.Y. 9/8/20), overturned that new rule. In that suit, some 20 states sued to stop implementation of the new regulation regarding joint employers. The Southern District of New York agreed with the plaintiffs. And, the DOL made it easy for the court to agree with the plaintiffs.

The Court noted that Department of Labor did not contest the estimate of costs of the new rule made by the EconomicPolicy Institute, a think tank. DOL simply replied that exact costs could not be measured. But, as the court noted, that does not mean evidence of the costs are not relevant. And, DOL made an unnecessary comment when it said that if all employers paid what they owed, then there would be no costs of the new rule. But, as the court noted, the Fair Labor Standards Act exists because some employers do not pay what they owe to American workers. If all employers paid what they owed, there would not be a Fair Labor Standards Act. Some DOL attorney probably felt smug in making that remark, but it did not help his/her position.¬†Indeed, the court found it “silly” to argue that all employers honored their commitments to pay a wage, and therefore the new rule would have no adverse effect. Such a silly statement disregards the whole purpose of the FLSA.

The court also engaged in a scholarly treatise of the definitions of “employer,” “employ” and “employee.” It noted that the FLSA intertwines all three definitions. The court said the new regulation disregards the meaning of the FLSA. The new rule defines employer with an illustrative example that an employer “includes” anyone acting with a direct or indirect interest on behalf of the employer. The new regulation adopted that one example and made it the entire definition of “employer.” The court noted rightly that the FLSA definition is more broad than just that one example.

And, the court noted that the FLSA, passed in 1938, was drafted to address “middle men” who hired child labor. It was also meant to deal with sweat shops. Those sweat shops were an early form of farmed-out labor. A manufacturer could hire a sweat shop and then avoid direct responsibility for the labor conditions. The new regulation disregarded that history.

See the decision here.