News & Commentary

April 2, 2019

Bibeka Shrestha

Bibeka Shrestha is a student at Harvard Law School.

The U.S. Department of Labor on Monday proposed a rule that would sharply limit the ability of workers to sue companies for violations of minimum-wage and overtime laws under a theory of joint employer liability.  If the rule becomes final, workers will face new hurdles to proving that corporations like McDonald’s and others that rely on franchisees and contractors should be held liable for such violations because the companies qualify as joint employers of the workers.  The Labor Department has proposed a four-factor test for holding companies liable as joint employers, considering whether the company actually exercises the power to hire or fire employees, supervises and controls work schedules or conditions of employment, determines rates and methods of payment, and maintains employment records.  In contrast, the Obama administration took a much more expansive view, arguing that companies should be liable as joint employers if they exercised forms of indirect control, such as providing software or developing policies relied upon by franchisees, or if franchisees or contractors were economically dependent on the companies.  The public will have 60 days to submit comments on the proposed rule once it is published in the Federal Register.  Critics of the proposal include Sharon Block, a former top official in the Obama Labor Department and executive director of the Labor and Worklife Program at Harvard Law School, who warned it would provide an “obvious road map for employers to evade liability.”  Matthew Haller, a senior vice president at the International Franchise Association, supported the move, however, arguing that it would create certainty for franchise businesses and counter a “proliferation of frivolous lawsuits” under the Obama-era rules.

New Mexico Gov. Michelle Lujan Girsham has signed into law a measure that will increase the state hourly minimum wage from $7.50 to $9 starting January 1.  The hourly minimum wage will gradually increase in New Mexico over the next few years, climbing to $10.50 on January 1, 2021, to $11.50 on January 1, 2022, then finally to $12 on January 1, 2023.  Tipped employees, including those who work at restaurants, will see modest gains in their base pay, which will rise from $2.13 an hour to $3 an hour by January 1, 2023.  Teenagers enrolled in high school will not be taking home a bigger paycheck, though, as their minimum hourly wage will be $8.50 an hour.  According to the Albuquerque Journal, these changes—the first statewide minimum wage hike in more than a decade—will affect an estimated 110,000 workers, most of them women.  New Mexico joins several other states that have recently increased their hourly minimum wage.  As Marissa previously reported, Maryland recently became the sixth state to enact a $15 minimum hourly wage, with Illinois and New Jersey passing similar laws earlier this year.

Politico reports that the National Labor Relations Board has lost 17 percent of its field staff since President Trump took office. The National Labor Relations Board Union sent a letter to Sens. Roy Blunt, R-Mo., and Patty Murray, D-Wash., stating that the number of field staff had dipped from 990 in February 2017 to 820 as of March 1. The union also told Politico that agency leadership was understating the number of unfair labor practice complaints that had been filed with field offices.

McDermott Will & Emery has become the latest law firm to drop its requirement that employees sign mandatory arbitration agreements.  The move comes as law students are pressing the National Association for Law Placement to begin asking law firms to disclose their use of mandatory arbitration agreements or nondisclosure agreements for claims of workplace misconduct.



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