Unlawful Department of Labor Rule Will Increase Wage Theft for Workers
HARRISBURG—Attorney General Josh Shapiro today led a coalition of 18 attorneys general in filing a lawsuit to stop the Trump Administration from eliminating key labor protections for workers.
The lawsuit challenges a United States Department of Labor (USDOL) rule that seeks to unlawfully narrow the joint employment standard under the Fair Labor Standards Act (FLSA). The FLSA is the federal law establishing a baseline of critical workplace protections, such as minimum wage and overtime, for workers across the country. The joint employment standard determines when more than one employer is responsible under FLSA because both exert sufficient influence over a worker’s employment. Under current rules, a business that subcontracts for labor may still be responsible to the workers if the subcontractor fails to pay the workers or cheats them out of overtime. The new rule from USDOL would undermine critical workplace protections for the country’s low-and middle-income workers and will lead to increased wage theft and other labor law violations because fewer employers will be liable for unpaid wages.
“Pennsylvania workers are entitled to minimum wage and overtime regardless of whether they work for a small company, a temporary agency, or a multinational corporation,” said Attorney General Josh Shapiro. “I will continue to fight for workers against harmful Trump Administration policies. I’m grateful for the collaboration between my Office and Attorneys General across the United States, who are standing up for the fair and just treatment of all Americans, regardless of job title and income.”
The coalition asserts that the rule directly undermines Congress’ intent for the FLSA, and that the USDOL violated the rulemaking process requirements. Further, they argue that the rule would inflict significant regulatory burdens on states and harm states’ economies and residents. The coalition is urging the court to declare the rule unlawful and invalidate the rule.
Over the past few decades, businesses have increasingly outsourced and subcontracted many of their core responsibilities to intermediary entities, instead of hiring workers directly. Because these intermediary entities tend to be less stable, less well funded, and subject to less scrutiny, they are more likely to violate wage and hour laws. In the suit, the coalition argues that USDOL’s new rule provides an incentive for businesses to offload employment responsibilities to smaller companies, which, under the new rule, will shield them from federal liability for wage and hour obligations under the FLSA. This will result in lower wages and increased wage theft for workers, especially for workers in low-wage jobs. Further, the new rule will make it more difficult to collect unpaid back wages for workers.
The new rule, the complaint argues, is incompatible with the text of the FLSA and Congress’ purposes in passing it to protect workers from unscrupulous employers. The rule also violates the law by attempting to overturn 75-year old Supreme Court precedent via regulation.
The suit was co-led by New York Attorney General Letitia James and Pennsylvania Attorney General Josh Shapiro, and was joined by California, Colorado, Delaware, the District of Columbia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Mexico, New Jersey, Oregon, Rhode Island, Vermont, Virginia, and Washington.
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