Trump Administration Issues Proposal To Limit Wage Claims Against Big Corporations

The right of employees to sue corporations like McDonald’s could be hampered if a new proposal takes effect.

The New York Times reports:

“The Labor Department released a proposal on Monday that would limit claims against big companies for employment-law violations by franchisees or contractors.

The proposal seeks to define when, for example, employees of a locally owned McDonald’s restaurant could challenge the McDonald’s Corporation over compliance with minimum-wage and overtime laws.

The proposal, which will require a 60-day public comment period before it can be finalized, could affect the ability of millions of workers to pursue wage claims under a concept called joint employment.

Franchisees and contractors can be small, poorly capitalized operations, complicating efforts to recover wages that were illegally denied. Instead, those efforts are often directed at large companies with whom those employers have relationships.

‘This proposal will reduce uncertainty over joint employer status and clarify for workers who is responsible for their employment protections,’ the labor secretary, Alexander Acosta, said in a statement.

The proposal is a sharp departure from the joint-employer criteria that the Labor Department laid out in 2016 under the Obama administration. Under those guidelines, a company like McDonald’s could be held liable for minimum-wage violations committed by a franchisee even if it did not directly supervise workers or hire and fire them. Exerting some forms of indirect control — like providing software or developing policies on which a franchisee relies — could make the larger corporation liable.

The Obama Labor Department also argued that corporations could be joint employers even without exercising control over a franchisee or contractor, simply because the smaller companies were economically dependent on them — for example, because the “upstream” company at the top of the supply chain provided facilities and handled payroll for a contractor.

The new proposal substantially restricts the situations in which a franchiser like McDonald’s would be considered liable. In an example laid out by the Labor Department, a global hotel brand would not be held liable for minimum-wage and overtime violations that a local franchisee committed, even if the franchisee relied on a variety of material provided by the hotel chain, such as sample employment applications and sample employee handbooks.”

For the rest of the story The New York Times here.

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