Back to blog
1 min readBy ACWI

Court Overturns Employer Rule

A New York judge largely overturned a Department of Labor regulation that went into effect in March redefining joint employer status. Although issued by a New York district court, the decision impacts employers nationwide. Democrat attorneys general in 17…

A New York judge largely overturned a Department of Labor regulation that went into effect in March redefining joint employer status.

Although issued by a New York district court, the decision impacts employers nationwide. Democrat attorneys general in 17 states and the District of Columbia had sued to overturn the rule.

The judge vacated major portions of the rule based on procedural grounds, holding that DOL failed to meet its obligations under the Administrative Procedures Act , which defines the steps federal agencies must take to create new regulations.

Vacated by the judge are parts of the rule that apply to what is called “vertical” joint employment. He said DOL was wrong when it defined joint employer liability based only on the Fair Labor Standards Act definition of “employer.”

He asserted that DOL had ignored the FLSA’s other text and Supreme Court and lower court precedents that defined joint employer liability differently.

Allowed to stand was the rule’s application to a “horizontal” joint employment relationship. Under that,  two employers are separate unless there is an agreement to share the employee’s services; one employer acts directly or indirectly in the interest of the other in relation to the employee; or employers share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.

Making matters even more confusing, the decision doesn’t mean returning to the Obama-era DOL joint employer rule, which has been vacated by the Trump DOL. Instead, the previous joint employer definition, which was adopted in 1958, will apply.

Attorneys Susan Harthill and Leni Battaglia of the Morgan Lewis & Bockius law firm, urge companies that relied on DOL’s new control test to restructure their business relationships after consulting with legal counsel about the applicable law because the federal circuit courts have applied different, multifactor tests, and state laws may vary as well.

Originally published October 30, 2020 · updated March 22, 2023.

Related reading

Browse all posts →
7 min

ACWI Spotlight: May 2026

HELLO MAY! Dear Members, We welcome May with a lot of global uncertainty — the tariffs that were imposed are now in the process of refunding, oil prices are at record highs, and the four-year transportation recession seems to be behind us. Manufacturing is coming back to America, Mexico just passed China as the #1 exporter to the U.S., and our team is positioning members to take advantage of both shifts…

5 min

ACWI Spotlight: April 2026

WELCOME SPRING! Dear Members, I know many of our members are welcoming Spring after a long hard winter. As you are reading this, I am attending the IWLA Conference in San Antonio, Texas. The IWLA is actually 20 years older than us and is the oldest Warehouse…

1 min

ACWI: Warehousing for Mid-Tier Companies

https://vimeo.com/1165350849?fl=pl&fe=sh Conversations at Manifest 2026: American Chain of Warehouses President Chris Kane was recently featured in a discussion with Russell W. Goodman , Contributing Editor at SupplyChainBrain, highlighting the evolving role…