Press Release: 2019-06-26
States Oppose U.S. Labor Department Rule that will Undermine Workers, Enable Wage Theft
BOSTON — At a time when the U.S. labor market is increasingly segmented, Attorney General Maura Healey today co-led a multistate group of 19 attorneys general in sending a comment letter opposing the U.S. Department of Labor’s proposal to scrap a rule that holds joint employers accountable for the proper treatment of their workers.
In the letter, sent today to U.S. Department of Labor (DOL) Secretary Alexander Acosta, the attorneys general challenge DOL’s proposed change to joint employer status under the Fair Labor Standards Act (FLSA), an interpretation that governs the liability of an employer who shares with another employer control over the terms and conditions of workers’ employment. The attorneys general contend that DOL has failed to justify this new interpretation and draws on outdated analysis that does not consider the changing nature of today’s workplace relationships, including the fact that a growing number of businesses are changing organizational models by outsourcing integral functions but still maintaining control of workers.
“The proposed rule undermines workers and gives employers a free pass on wage theft,” said AG Healey. “Our goal is to help protect workers in a changing economy and we urge the Department to reconsider this step backward.”
Under DOL’s proposed rule, joint employment would be determined by whether an employer hires or fires the employee, supervises and controls the employee’s schedule and working conditions, determines the employee’s rate and method of payment, and maintains the employee’s records. But according to the attorneys general, this proposal is inconsistent with the purpose of the FLSA – to protect workers – and ignores more than 30 years of private sector development during which the economy and the workplace have changed.
Further, the attorneys general write that DOL’s proposed rule does not reflect today’s workplace relationships, where businesses increasingly share employees using third-party management companies, independent contractors, staffing agencies, or other labor providers. By narrowing the scope of the joint employment, the DOL’s change will leave millions of workers vulnerable to unchecked violations of federal and state labor laws.
Massachusetts has notably held employers jointly accountable for wage and hour violations based on existing caselaw interpreting joint employment under the FLSA. In March 2017, the AG’s Office cited UnWrapped Inc. for its role in a labor scheme that deprived wages to hundreds of workers and, in June 2017, the three staffing agencies that supplied workers to the company. In November 2017, the AG’s Office cited Shield Packaging Inc. for using staffing agencies to pay its workers in attempt to protect itself from liability for allegations of wage theft leveled against the company.
If the federal standard fails to encompass companies that pay for subcontracted employees while also controlling the terms of employment, the attorneys general contend that gaps in legal compliance will inevitably increase, leaving workers at greater risk of exploitation.
Today’s comment letter was co-led by the attorneys general from Massachusetts, New York, and Pennsylvania, and joined by California, Connecticut, Delaware, the District of Columbia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.