Federal Trial Court Rules in New York v. Scalia That Key Provisions of Labor Department’s New FLSA “Joint Employer” Rule Are Invalid

As we have previously reported, early this year the U.S. Labor Department (DOL) finalized new interpretive rules governing the so-called “joint employment” standard under the Fair Labor Standards Act (FLSA). The new rules, which were welcomed by employers, were particularly noteworthy in that they stated a clearer test for determining an important type of joint employment, sometimes referred to as “vertical joint employment.”

As has been the case with many regulations issued during the Trump Administration, however, the rules were immediately challenged in a lawsuit brought by several states, led by the Attorney General of New York, and a federal district court ruled this week that the majority of DOL’s revisions are unlawful. According to the trial court judge, DOL’s revisions both conflict with the FLSA and were adopted in an arbitrary and capricious manner in violation of the Administrative Procedure Act (APA).

While DOL has the option of appealing the ruling, for now the invalidated provisions of the rule have been vacated and cannot be relied upon by employers.

Members of the Center for Workplace Compliance (CWC) can read more here.