Yesterday, the Department of Labor (DOL) announced a final ruling on the joint-employer standard under the Fair Labor Standards Act (FLSA) that substantially narrows the set of circumstances whereby a firm can be found to be a joint employer. (Firms that are joint employers are each responsible for complying with workplace protection rules.) This rule creates an incentive for large corporations to outsource work to staffing companies or subcontractors and escape responsibility under the FLSA. It is a large setback for working people and their rights on the job.

The FLSA was drafted broadly, creating employer coverage to ensure that companies that use staffing companies or subcontractors in their business operations are held accountable for complying with basic workplace protections. DOL’s final rule substantially limits shared liability for wage and hour violations, making it harder for workers to hold all parties who set their terms of employment accountable. EPI estimates this ruling will cost workers more than $1 billion annually—more than $954.4 million due to wage suppression from an increase in workplace “fissuring” (also known as subcontracting or domestic outsourcing) and more than $138.6 million from wage losses due to an increase in wage theft by employers. DOL’s updated joint-employer standard under the FLSA is yet another example of the Trump administration putting the interests of large corporations over those of working people.