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Judge Voids Part of DOL Joint Employer Rule, Leaves Other Provisions in Place

On Tuesday, a federal judge in New York voided part of the U.S. Department of Labor’s Joint Employer Rule interpreting when two employers may be deemed the joint employer of a worker under the Fair Labor Standards Act.  Judge Gregory Woods of the U.S. District Court for the Southern District of New York ruled that the Labor Department’s test for vertical employment — 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—was “arbitrary and capricious.”

Judge Woods, however, left in force the portion of the regulation concerning “horizontal employment” — when a worker has individual employment relationships with multiple businesses that are associated with each other. The challenge to the DOL regulation was brought by the states of New York, Pennsylvania, California, Colorado, Delaware, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Washington, Vermont, Virginia and the District of Columbia.

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