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Trump Administration’s New Law May Have Made Wage Theft Lawsuits Harder, But Not in California

The Trump Administration announced last week that it has loosened the federal government’s “joint employer” rule for businesses that use outside contractors for a variety of jobs. According to a report and analysis in the Los Angeles Times, this will make it more difficult for victims of wage theft at staffing agencies and subcontractors to sue companies where the violations occur. The rule also frees franchising companies from the responsibility for working conditions at their franchises.

California Has Stronger Laws

This new policy essentially overturns a 2016 Obama administration rule that allowed workers to hold companies accountable for stealing their wages or shortchanging them on their wages. The Trump administration’s policy has received praise from business organizations, but it is understandable why workers’ rights organizations oppose it. But California officials say this new rule will not impact California businesses because the state’s laws offer protections to workers. California’s labor laws are not preempted by the federal Fair Labor Standards Act, under which the Trump rule was issued.

Under California laws, the definition of  “an employer” is broad enough to reach any individual or entity that directly or indirectly employers or exercises control over an employee’s wages, hours and working conditions, officials told the Times. California has the strongest wage and hour laws. The state also has a higher minimum wage and a lower overtime threshold than federal law.

When it comes to franchises, the Trump administration’s joint employer law doesn’t affect California because the state’s jurisdiction over franchises was limited by an October 2019 court decision where 1,400 workers sued McDonald’s alleging that its franchisees denied them overtime, meal and rest breaks. In that case, the state’s appellate court ruled that the company was not a joint employer responsible for franchisee violations under California law.

Fighting for Workers’ Rights

While the new rule may not affect California, it could have widespread effects across the country at a time when large corporations such as McDonald’s and Amazon have faced lawsuits that argue that the companies should be held accountable along with franchisees for wage theft and overtime violations. The new policy takes effect on March 16.

As California class action lawyers who represent the rights of workers, we are saddened to note that the Trump administration’s new rule is going to adversely affect workers nationwide especially as they try to assert their rights and recover wages that were stolen from them. We are grateful for strong wage and hour laws in California and will continue to fight for workers’ rights and hold corporations trying to shortchange them accountable.


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California Personal Injury Blog