The Labor Department issued an official rule on Sunday that corporations are only liable when they directly control the policies of their franchisees, effectively rolling back Obama administration policy that had tried to benefit unions, the Washington Examiner reported.
The Obama administration attempted, through the so-called joint employer rule, to have franchiser corporations be legally responsible for workplace violations by their franchisees, even if those were legally independent businesses.
The Trump administration ruled that in order to fit the definition of “joint employers,” both companies had to have the ability to: hire or fire an employee; determines their work schedule and pay, as well as maintain the employment records of the worker.
"This final rule furthers President Trump’s successful, government-wide effort to address regulations that hinder the American economy and to promote economic growth,” Labor Secretary Eugene Scalia said in a news release. “By giving greater clarity to businesses who want to work together, we promote an entrepreneurial culture that has driven American prosperity for decades.”
The Trump administration has been working on the issue since the president entered the White House, as business groups had opposed the Obama policy effort on the grounds that many corporations would not get involved in franchising due to concerns over additional liability. Unions backed Obama’s efforts because it made the conditions more ripe for the organized efforts of workers to pressure corporations.
Just last month the National Labor Relations Board, in settling a "joint employer" case from the Obama era against McDonald’s Corporation, determined that the company was not a joint employer with its franchise restaurants, according to Lexology.