WASHINGTON – On June 6, U.S. Secretary of Labor Alexander Acosta formally announced the withdrawal of the Labor Department’s 2015 and 2016 informal guidance on joint employment and independent contractors. The department’s interpretation of joint employment identified scenarios in which two or more companies jointly employ a worker and are therefore jointly liable for labor violations.

The Washington Examiner reports that rescinding the rule is a win for business groups that staunchly opposed the former Obama administration’s rule. The news source notes that the joint employer rule refers to cases in which a business can be said to effectively control the workplace policies of another company, such as when a company subcontracts to another business. Companies, particularly ones that franchise, were concerned that they could be held liable for all manner of violations at workplaces they didn’t directly oversee.

"While uncertainty surrounding the new joint employer standard has made it harder for America's 733,000 franchise owners to grow and create new jobs, we are pleased the DOL is taking first steps to undo this costly regulation created by the previous administration. That being said, we urge Congress to now recognize the uncertainty and unreasonable costs the NLRB's decision has placed on franchise owners and take action to find a true permanent solution," Matt Haller, spokesman for the International Franchise Association, told the new source.