Trump's joint-employer rule curbs wage theft lawsuits, but not in California

Margot Roosevelt, Los Angeles Times on

Published in Business News

Say you're a company that hires a janitorial staffing agency to clean your offices or a security firm to patrol your parking lot.

Say you're a retailer that relies on outside truckers to deliver your goods.

Say you're a general contractor who hires drywall and electrical subcontractors.

Are you responsible if those workers are paid less than minimum wage and denied overtime?

The Trump administration Monday loosened the federal government's "joint employer" rule for businesses that contract out work, making it harder for victims of wage theft at staffing agencies and subcontractors to sue companies where the violations take place. The rule also frees franchising companies from responsibility for working conditions at their franchises.

The new policy overturned a 2016 Obama administration rule that had broadened workers' ability to put companies on the hook for shorting paychecks. The Trump policy, which prompted 60,000 public comments after it was proposed last spring, was hailed by business groups and assailed by workers' rights organizations.


But the new rule will have no effect on California businesses because "our laws are more protective" of workers, according to California Labor Department spokeswoman Crystal Page. And California labor laws are not preempted by the federal Fair Labor Standards Act, under which the Trump rule was issued.

"The definition of employer in California is broad enough to reach any person, company or agency who directly or indirectly employs or exercises control over an employee's wages, hours or working conditions," she added.

California has the country's strongest wage and hour laws, with a higher minimum wage and a lower threshold for overtime than federal law, noted Tia Koonse, a research manager at the UCLA Labor Center.

"Most workers wouldn't sue under (federal law) because they'd recover more money using state laws," Koonse said. "So this new federal rule doesn't have any practical impact. California is the envy of other states for its protections for precariously employed workers."


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