A federal judge in Manhattan has declared the most consequential elements of the Trump administration’s recent joint employer regulation illegal, halting what’s been a priority for Republicans and the business community.
The Labor Department regulation, which took effect in March, narrows the scenarios in which multiple businesses can be held liable under the Fair Labor Standards Act for failing to pay minimum wages and overtime to workers.
Judge Gregory H. Woods of the U.S. District Court for the Southern District of New York ruled Tuesday that the DOL regulation is “arbitrary and capricious” and inconsistent with the FLSA, setting aside the department’s new standard. The ruling vacates the agency’s new test for vertical employment, referring to when a worker enters an employment relationship with one company, such as at a staffing agency or subcontractor, but is economically dependent on another employer.
