The Trump administration introduced new regulations Wednesday aimed at reducing corporate responsibility when contractors or franchise partners fail to follow federal wage requirements.
Federal labor officials announced a proposed regulation that would limit when businesses can be held accountable as “joint employers” of workers employed by other companies under laws governing minimum wage and overtime compensation.
This regulation mirrors a similar measure implemented during Trump’s previous presidency that received support from business organizations but was later overturned by former President Joe Biden’s administration.
Acting Labor Secretary Keith Sonderling explained that the proposed changes aim to simplify legal compliance for employers, which he believes will ultimately help workers.
“A clear standard on joint employment would give businesses more confidence to invest in partnerships, help employees understand their rights, and make the department’s investigations more efficient,” Sonderling stated.
The regulation will shape how the department conducts enforcement activities and may influence private legal cases, although courts are not required to follow the guidelines.
Officials plan to publish the proposal formally on Thursday, followed by a 60-day period for public feedback. A finalized version could be implemented before the end of this year.
The announcement comes after Trump-appointed Labor Secretary Lori Chavez-DeRemer stepped down this week following misconduct allegations, including accusations of an inappropriate relationship with a security team member and misuse of department resources for personal travel. Chavez-DeRemer did not respond to these claims in her resignation statement.
The joint employment issue has sparked significant debate in labor law circles over the past ten years, resulting in multiple competing regulations from various federal enforcement agencies.
In February, the National Labor Relations Board, which operates independently from the Labor Department and oversees union organizing rights, eliminated a Biden-era joint employment rule and restored standards from Trump’s first administration.
Similar to the labor board’s approach, the Labor Department’s new proposal states that companies qualify as joint employers only when they maintain direct authority over hiring decisions, worker supervision, compensation, and personnel documentation.
Worker advocacy organizations have criticized this framework. The Economic Policy Institute, a progressive research group, argued in 2020 that Trump’s original rule would hinder efforts to combat wage theft and result in workers losing over $1 billion each year.
