Attorneys general from 17 states asked a federal judge to block a new Department of Labor (DOL) regulation that limits the circumstances where multiple companies can be held jointly accountable for wage violations. Under the new regulation, it is less likely that multiple companies will be considered liable in class action lawsuits for unpaid minimum wages or overtime pay under the Fair Labor Standards Act.
Protecting employee rights
According to the state coalition opposing the rule, the DOL’s regulation allows large companies to evade legal responsibility, and increases the potential for wage theft and underpayment of employees. Proponents of the regulation, however, claim that the rule will allow businesses working together to improve the training and benefits of employees. Two industries that will be affected significantly by this new rule are franchise businesses and companies that employ the services of contractors.
Businesses that are franchised, including many restaurants and hotels, are often targets of class-action lawsuits which allege that the franchisor is jointly liable along with the franchisee for owed wages. Similarly, businesses that employ the services of contractors have often been held legally responsible for a contractor’s labor violations as a result of their business relationship. The DOL’s regulation adopts a four-part test to determine whether a business is a joint employer and it makes it much less likely that a franchisor would be considered the employer of a franchisee’s workers or that a business would be considered the employer of a contractor’s employee.
Knowing when a company is in violation
As an employee, it’s important to educate yourself and know when your employer is committing potential wage and labor violations. If you believe that your employer is undergoing unfair wage and labor practices, you need to contact an attorney experienced in employment law to see where you stand.