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The Colorado Department of Labor and Employment (CDLE) on May 25 finalized proposed changes to a wage rule it first adopted as an “emergency” measure in March to include an expansive standard of joint employment. After seeking public comment on the proposal, however, the CDLE removed the language, which had mimicked the unwieldy definition of joint employment articulated in 2016 by the U.S. Department of Labor’s Wage & Hour Division (WHD) during the Obama administration—a definition the current administration rejected with a final rule published in January 2020.
On April 15, 2020, the CDLE published its proposal to make permanent the changes to Colorado Overtime & Minimum Pay Standards (COMPS) Order #36, which applies to minimum wages as well as overtime and other wage and hour standards. The revision became necessary because Colorado law specifically states that the term “employer” “has the same meaning as set forth in the federal ‘Fair Labor Standards Act,’” and the CDLE believed the “state of affairs has been upset” by the 2020 WHD regulation, which it said “abrogates essentially all existing joint employment law” by overturning the Obama administration’s flawed interpretation.
The proposed changes to the COMPS Order would have inserted a rule for joint employment with a “non-exclusive list of relevant factors” to determine whether two or more employers are joint employers of an individual. Among those factors were several one might expect, such as the “power to control or supervise the worker” beyond merely overseeing performance of a contract and “the power to set pay or other employment terms or conditions, or to hire or fire.”
In addition to those more traditional elements, the proposal would have evaluated “the economic dependence of the worker on the potential joint employer, as shown by the nature of the work (e.g., low-skill or low-training) or other facts,” as well as the “duration and extent” of the potential joint employer’s relationship with the worker and another potential joint employer.
The proposal stated in a footnote that those factors derived in part from the 2016 WHD Administrator’s Interpretation issued by former Administrator David Weil. It also stated that those “factors are analyzed based on the economic realities, not solely on contractual language,” and the “analysis must encompass the totality of all relevant facts and circumstances” relevant to the “economic realities.”
As this blog has observed before, this “economic realities” test reflects Weil’s cynical view of employers, which he laid out in a book called The Fissured Workplace, which became the intellectual framework for an expansive joint employer standard. Under his theory, countless employers engaged in commonplace—and longstanding—business practices (such as franchising) would be ensnared in joint employment relationships placing liability on businesses for employees they do not actually employ and workplaces they do not actually control.
The CDLE held a public hearing about its proposal on May 15 and set a May 20 deadline for public comments. A coalition of trade associations and other organizations, including the U.S. Chamber of Commerce, submitted a letter objecting to the joint employer language included in the temporary COMPS Order issued in March, as did other business groups. Thankfully, the CDLE appears to have listened to the concerns of the business community, at least for now.