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Federal Court Invalidates Part of ‘Joint Employer’ Rule—Here is What it Could Mean for Franchise Law in Florida


In September, the United States District Court for the Southern District struck down a portion of the DOL’s new ‘joint employer’ rule. The decision came after New York—and sixteen other states—filed a lawsuit to stop the implementation of the new standard. Notably, Florida was not among the states seeking to block the revised ‘joint employer’ regulation.

Nonetheless, the federal court’s decision, and the current political environment, could have significant implications for franchisors, franchisees, and other employers in Florida. In this article, our West Palm Beach franchise law attorneys explain the key things you should know about the joint employer standard.

What is the Vertical Joint Employer Standard?

The vertical joint employer standard (vertical joint employer rule) was put in place early this year by the Department of Labor (DOL). As explained by the federal agency, the rule essentially narrows the criteria for when two separate employers—often franchisors and franchisees, but also staffing companies and contractors/subcontractors—can be found liable as joint employers under the Fair Labor Standards Act (FLSA).

Federal Court: DOL Rule is Too Narrow and Conflicts With FLSA 

In ruling in favor of the seventeen state coalition that sued to block the DOL’s vertical joint employer rule, the New York-based federal court assessed the rule was too narrow and that it conflicts with the legislative intent of the FLSA. At least for the time being, the rule will not go into effect in New York.

To be clear, this federal court has no jurisdiction over franchise businesses in Florida. Still, it is important for all employers to remain vigilant when structuring their relationships. Additional legal challenges are still ongoing. Further, the campaign for Democratic candidate Joe Biden has expressed skepticism of the rule. Depending on the results of the presidential election, the DOL may change course on its own.

Understanding the Implications for Franchisors and Franchisees in Florida 

If you own a franchise business in Florida, it is imperative that you have an understanding of your rights and responsibilities under state and federal law. The key takeaway from the decision: The vertical joint employer standard is in a state of flux. There is considerable uncertainty going forward.

Given the inherent challenges, franchise employers should be extremely careful and cautious when relying on the DOL’s ‘vertical’ joint employer definition for the time being. There could still be changes coming. Our Florida franchise lawyers will keep a close eye on court decisions and any further legislative developments. 

Call Our West Palm Beach Franchise Lawyers for Immediate Help

At Pike & Lustig, LLP, our Florida franchise law attorneys are diligent, effective advocates for our clients. We help employers find solutions to their issues. If you have any questions about the joint employer standard, we are available to help. Call our law office today to arrange your confidential initial consultation. We represent franchisors and franchisees throughout Southeastern Florida, including in West Palm Beach, Miami, Fort Lauderdale, Miami Beach, and Hialeah.


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