Amy DeBisschop
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division,
U.S. Department of Labor
Room S-3502
200 Constitution Avenue NW
Washington, D.C. 20210

Comments on RIN 1235-AA26: Joint Employer Status Under the Fair Labor Standards Act

Submitted at: https://www.regulations.gov/comment?D=WHD-2019-0003-0001

Dear Ms. DeBisschop:

As Co-Director of the Center for Economic and Policy Research, I write to you to oppose the Department of Labor’s proposed rulemaking that severely limits the responsibilities under the Fair Labor Standards Act of employers that contract out work. The proposed rule overlooks decades of legal precedent and proposes a test that would apply to almost no subcontracting firms. It would deny necessary protections to vulnerable workers placed in jobs by temporary staffing agencies and to those that work for contract companies in warehousing, janitorial services, construction, home health care among others.

I am the coauthor of a report that documents the increasing importance of domestic outsourcing in the U.S. This report was prepared for the U.S. Department of Labor (DOL), Chief Evaluation Office. We were invited to present it at the Department of Labor's Future of Work Conference in 2015.

The report documents widespread increases in inter-firm contracting relationships, especially of large corporations that contract with smaller companies that employ low-paid workers.

Both firms that outsource work and companies and workers who do the work need to be held accountable for any violations of employment laws – minimum wage and overtime violations, health and safety violations, wage theft, child labor. When work is outsourced, workers lack bargaining power vis a vis the contract company that is their direct employer or the firm that outsourced the work and benefits from it. These workers rely for fair treatment on employment protections guaranteed by state and federal laws governing pay and working conditions. But these laws may fail to protect them if the firms that have outsourced the work are not jointly responsible for assuring they are followed. Too often, the outsourcing firm contracts with the lowest bidder to get the work done, and these contracts may put undue pressure on the contractor to companies to evade labor protections. If the contractor company is forced by the terms of the contract with the firm that outsources the work to operate on a shoestring budget, such violations are likely to occur. Holding the firm that is outsourcing the work jointly responsible for the workers who perform it will mitigate the tendency to underpay the contractor for services provided. And it will level the playing field for companies that do play by the rules to win contracts and enjoy financial success.

Recognizing the role of joint employers will increase compliance with employment laws as firms realize that they cannot avoid responsibility for workers just by outsourcing the work. And indeed, U.S. labor and employment laws, including the FLSA, have long recognized that a worker can have more than one employer. The proposed rule fails to consider the cases where two companies share control over important aspects of the work being performed. It alters the definition of ‘employ’ in the Fair Labor Standards Act. It narrows the definition of who is responsible for an employee and is counter to legal precedent.

If adopted, the proposed rule would let employers use staffing companies or subcontractors to employ workers to do work their company requires, and then walk away from any responsibility for labor law violations that undermine the pay and safety of these workers.

For these reasons, I oppose the proposed rule.

Sincerely,

Eileen Appelbaum, PhD