One of the top priorities of President Donald Trump’s administration has been removing oppressive federal regulations that constrain the U.S. economy by hampering job growth and stifling innovation — and the latest move by the White House falls right in line with that platform.
According to the Washington Examiner, the Labor Department announced Sunday that it would be rolling back the Obama-era “joint employer” rule, an anti-business, pro-union regulation that, according to Trump Labor officials, cost the economy $5 billion annually and prevented upwards of $11 billion from making its way into Americans’ pockets each year.
In a joint op-ed for the Wall Street Journal, Labor Secretary Eugene Scalia and White House acting Chief of Staff Mick Mulvaney explained: “When we lift the heavy hand of government and allow businesses to create jobs, enter new markets, and compete at lower prices, every American wins.”
Scalia and Mulvaney cited the White House Council of Economic Advisers when saying, according to the Examiner, that “the Obama-era rules imposed annual net costs of $5 billion and reduced incomes by $11 billion.”
Uniformity and prosperity
The so-called “joint employer” rule, which was largely opposed by business owners and lauded by labor unions, held certain businesses liable for what went on at the workplaces of other businesses over which they had “indirect control.” Critics said the rule discouraged franchising and subjected employers to unnecessary legal liability, according to the Examiner.
Now, the U.S. Department of Labor has announced a replacement measure that more clearly defines whether a business has enough control over another to warrant legal liability.
In a statement released Sunday, the Labor Department said the revisions “add certainty regarding what business practices may result in joint employer status” under the Fair Labor Standards Act (FLSA).
“This rule promotes greater uniformity among court decisions by providing a clearer interpretation of FLSA joint employer status,” the department added. “These benefits will in turn improve employers’ ability to remain in compliance with the FLSA and will help reduce litigation costs.”
A pro-business president
In its statement, the Labor Department said future determinations of which companies qualify as joint employers will consider “whether the potential joint employer…[h]ires or fires the employee; [s]upervises and controls the employee’s work schedule or conditions of employment to a substantial degree; [d]etermines the employee’s rate and method of payment; and [m]aintains the employee’s employment records.”
According to the Labor Department, the changes will go into effect by March 12. But while critics of the move, like the National Employment Law Project, have said that rule “will make it easier for companies to cheat workers and get away with it,” according to the Examiner, not everyone is upset by the deregulatory measure.
“This resolution provides much-needed clarity for the 733,000 franchise establishments across America and returns to the traditional standard of business that has fundamentally supported and encouraged franchise entrepreneurship for decades,” International Franchise Association president Robert Cresanti said, according to the Examiner.
Labor Sec. Scalia said in a statement that the rule “furthers President Trump’s successful, government-wide effort to address regulations that hinder the American economy and to promote economic growth.”
“By giving greater clarity to businesses who want to work together, we promote an entrepreneurial culture that has driven American prosperity for decades,” he added.