On March 31, 2021, the Secretary of Homeland Security ratified a final rule entitled, EB-5 Immigrant Investor Program Modernization. See 84 FR 35750 (July 24, 2019). The Department is now publishing the ratification in the Federal Register out of an abundance of caution. Neither the ratification nor the publication is a statement that the ratified action would be invalid absent the ratification, whether published or otherwise.

On May 4, 2021, the Secretary of Homeland Security ratified a final rule entitled, Removal of 30-Day Processing Provision for Asylum Applicant-Related Form I-765 Employment Authorization Applications, as well as the associated notice of proposed rulemaking. See 85 FR 37502 (June 22, 2020); 84 FR 47148 (Sept. 9, 2019). The Department is now publishing the ratification in the Federal Register out of an abundance of caution. Neither the ratification nor the publication is a statement that the ratified action would be invalid absent the ratification, whether published or otherwise.

On April 15, 2021, the Secretary of Homeland Security ratified a final rule entitled, Procedures and Standards for Declining Surety Immigration Bonds and Administrative Appeal Requirement for Breaches. See 85 FR 45968 (July 31, 2020). The Department is now publishing the ratification in the Federal Register out of an abundance of caution. Neither the ratification nor the publication is a statement that the ratified action would be invalid absent the ratification, whether published or otherwise.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136) was enacted to provide emergency assistance and health care response for individuals, families, and businesses affected by the Coronavirus Disease 2019 (COVID-19) pandemic. Section 1102 of the CARES Act temporarily permitted the Small Business Administration (SBA) to guarantee 100 percent of 7(a) loans under a new program titled the “Paycheck Protection Program,” pursuant to section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) (First Draw PPP Loans). Section 1106 of the CARES Act provided for forgiveness of up to the full principal amount of qualifying loans guaranteed under the Paycheck Protection Program (PPP). On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act (Pub. L. 116-139) was enacted, which provided additional funding and authority for the PPP Program.

On June 5, the Paycheck Protection Program Flexibility Act of 2020 (PPP Flexibility Act) (Pub. L. 116-142) was enacted, which changed provisions of the PPP relating to the maturity of PPP loans, the deferral of PPP loan payments, and the forgiveness of PPP loans. On July 4, 2020, Public Law 116-147 extended the authority to guarantee PPP loans to August 8, 2020.

On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) (Pub. L. 116-260) was enacted. The Economic Aid Act reauthorized lending under the PPP through March 31, 2021. The Economic Aid Act added a new temporary section 7(a)(37) to the Small Business Act, which authorizes SBA to guarantee additional PPP loans (Second Draw PPP Loans) to certain eligible borrowers that previously received a First Draw PPP Loan under generally the same terms and conditions available under section 7(a)(36) of the Small Business Act. Among other things, to be eligible for a Second Draw PPP Loan, the borrower must have experienced a revenue reduction of not less than 25% in at least one quarter of 2020 compared to the same quarter in 2019. The Economic Aid Act also redesignated section 1106 of the CARES Act as section 7A of the Small Business Act, to appear after section 7 of the Small Business Act. Additionally, the Economic Aid Act provided for a simplified forgiveness application process for PPP loans of $150,000 or less.

On March 11, 2021, the American Rescue Plan Act (ARPA) (Pub. L. 117-2) was enacted, and among other things, expanded eligibility for First Draw PPP Loans and Second Draw PPP Loans and revised exclusions from payroll costs for purposes of forgiveness. On March 30, 2021, the PPP Extension Act of 2021 (Pub. L. 117-6) was enacted, extending SBA's PPP program authority through June 30, 2021.

From April 3, 2020, through August 8, 2020, when the 2020 round of PPP expired, SBA guaranteed over 5.2 million PPP loans made by over 5,000 PPP lenders under delegated authority. From January 11, 2021, when the PPP reopened, through June 30, 2021, when the PPP program authority expired, SBA guaranteed over 6.6 million additional PPP loans. Thus, the total number of PPP loans guaranteed by SBA exceeds 11.8 million. 1 The total dollar amount of the PPP loans guaranteed by SBA exceeds $806 billion.

SBA posted the first interim final rule implementing the PPP on SBA's website on April 2, 2020, and published the rule in the Federal Register on April 15, 2020 (85 FR 20811). SBA subsequently issued numerous additional interim final rules. On June 1, 2020, SBA published an interim final rule on loan forgiveness requirements (85 FR 33004) and an interim final rule on loan review procedures (85 FR 33010). Prior to the publication of the loan forgiveness and loan review interim final rules, on May 15, 2020, SBA issued SBA Form 3508, which was a loan forgiveness application to be used by all PPP borrowers.

On June 26, 2020, SBA published an interim final rule revising the loan forgiveness and loan review procedures to conform to the key forgiveness changes made by the PPP Flexibility Act (85 FR 38304). In conjunction with the rule, SBA issued a second loan forgiveness application form, SBA Form 3508EZ, which is a streamlined form that incorporates the forgiveness safe harbors established under the PPP Flexibility Act.

SBA's 2020 PPP program authority expired on August 8, 2020. On August 10, 2020, SBA began accepting PPP lender decisions on PPP borrower loan forgiveness applications through SBA's Paycheck Protection Platform (Platform) ( forgiveness.sba.gov ). PPP borrowers were required to submit their loan forgiveness applications to their PPP lenders, and as required by section 1106 of the CARES Act (now section 7A of the Small Business Act), lenders were required to issue a decision to SBA on the borrower's loan forgiveness application within 60 days of receipt of the application. On August 27, 2020, SBA issued an interim final rule on Appeals of SBA Loan Review Decisions under the Paycheck Protection Program (85 FR 52883). On October 2, 2020, SBA began remitting forgiveness payments to PPP lenders that submitted forgiveness decisions to SBA through the Platform. SBA continues to remit forgiveness payments to PPP lenders, and as of July 12, 2021, SBA has remitted over 4.3 million forgiveness payments to lenders. 2

On October 19, 2020, in response to borrower and lender concerns about the complexity of the loan forgiveness process for the smallest of borrowers, SBA and the Department of the Treasury (Treasury) jointly issued an interim final rule revising the loan forgiveness and loan review procedures to simplify the forgiveness process for PPP loans of $50,000 or less. Among other things, the rule exempted borrowers with loans of $50,000 or less from the full-time equivalent employee (FTE) and salary/wage reduction penalties included in section 1106 of the CARES Act, under the joint SBA/Treasury statutory authority to make de minimis exemptions to those penalties. In conjunction with the rule, SBA issued a third loan forgiveness application, SBA Form 3508S, which was a further streamlined loan forgiveness application available for use by borrowers with loans of $50,000 or less.

On January 14, 2021, SBA published interim final rules implementing the Economic Aid Act amendments to the PPP. The first interim final rule implemented Economic Aid Act changes to, among other things, PPP eligibility, and consolidated numerous prior interim final rules on PPP (86 FR 3692) (Consolidated Eligibility IFR). The second interim final rule implemented the Second Draw PPP Loan program authorized by the Economic Aid Act under section 7(a)(37) of the Small Business Act (86 FR 3712) (Second Draw IFR). On February 5, 2021, SBA published a third interim final rule implementing Economic Aid Act changes related to the forgiveness and review of PPP loans (86 FR 8283) (Consolidated Forgiveness and Loan Review IFR). Among other things, the Consolidated Forgiveness and Loan Review IFR implemented the simplified forgiveness application process for loans of $150,000 or less required by the Economic Aid Act. In conjunction with this rule, on January 19, 2021, SBA issued a revised SBA Form 3508S, which increased the loan amount for which the form could be used from $50,000 to $150,000. 3 The new SBA Form 3508S was also shortened to one page, as required by the Economic Aid Act, and no longer requires the submission of supporting forgiveness documentation, as mandated by the Economic Aid Act.

Following the publication of the interim final rules implementing the Economic Aid Act, SBA published another interim final rule on March 8, 2021, revising certain loan amount calculation and eligibility provisions for PPP (86 FR 13149). On March 22, 2021, SBA published an interim final rule implementing the PPP provisions of ARPA (86 FR 15083).

As described below, this interim final rule further streamlines the forgiveness process for PPP loans of $150,000 or less by (a) allowing lenders to use a COVID Revenue Reduction Score at the time of loan forgiveness to document the required revenue reduction for Second Draw PPP loans of $150,000 or less, and (b) establishing a direct borrower forgiveness process for lenders that choose to opt-in as an alternative method of processing loan forgiveness applications for PPP Loans of $150,000 or less. This interim final rule also extends the loan deferment period for those PPP loans where the borrower timely files an appeal of a final SBA loan review decision with the SBA Office of Hearings and Appeals.

This interim final rule is being issued without advance notice and public comment because section 1114 of the CARES Act and section 303 of the Economic Aid Act authorize SBA to issue regulations to implement the Paycheck Protection Program without regard to notice requirements. Even otherwise, SBA finds good cause for setting aside the advance notice-and-public-comment procedure because that procedure would be impracticable and contrary to the public interest. The intent of the CARES Act and the Economic Aid Act is to afford SBA the flexibility to provide relief to America's small businesses and nonprofit organizations expeditiously. Given the urgent need to provide borrowers with timely relief, the purpose of the rule is to minimize the burdens of the current loan forgiveness process that, without modification, could result in borrowers unnecessarily having to make principal and interest payments on loans that should be forgiven. If SBA were to follow the advance notice-and-public-comment process, that would delay issuance of the rule by at least three months. SBA understands—based on its expertise and consistent portfolio analysis—that a significant number of borrowers will have to apply for loan forgiveness in the next three months. Therefore, if the proposed rule is still undergoing notice and comment during that time, these borrowers will be applying under the current process, which (as noted above) would mean these borrowers could unnecessarily have to make principal and interest payments on loans that should be forgiven and would not be positively impacted by a later rule change. Providing for notice and comment would render the rule effectively moot and useless for millions of intended beneficiaries.

For these same reasons, SBA has determined that it is impractical and not in the public interest to provide a 30-day delayed effective date. An immediate effective date will allow SBA to expedite loan forgiveness to small businesses and nonprofit organizations and remit forgiveness payments to lenders.

This good cause justification also supports waiver of the 60-day delayed effective date for major rules under Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act) at 5 U.S.C. 808(2). Although this interim final rule is effective immediately, comments are solicited from interested members of the public on all aspects of the interim final rule.

These comments must be submitted on or before August 30, 2021. SBA will consider these comments and the need for making any revisions as a result of these comments.

A key feature of the PPP is that a borrower may obtain forgiveness of up to the full amount of its PPP loan provided that the borrower complied with PPP requirements. Since SBA issued the first loan forgiveness application form (SBA Form 3508) in May 2020 and published the first loan forgiveness and loan review rules in June 2020, SBA has received comments from borrowers and lenders that the loan forgiveness process is overwhelming and difficult to manage and requesting simplification of the process. In response to borrower and lender requests for simplification of the loan forgiveness process, Congress enacted the PPP Flexibility Act in June 2020, which created safe harbors from the FTE and salary/wage reduction penalties of section 1106 of the CARES Act, and in response, SBA issued a new streamlined loan forgiveness application (SBA Form 3508EZ) implementing those changes.

In October 2020, SBA and Treasury exempted borrowers with loans of $50,000 or less from the FTE and salary/wage reduction penalties and issued a second new streamlined loan forgiveness application (SBA Form 3508S) implementing those changes. Borrowers and lenders continued to express concerns about the complexity of the loan forgiveness process, and in December 2020, Congress enacted the Economic Aid Act, which provides for a simplified loan forgiveness application process for borrowers with loans of $150,000 or less. SBA implemented this requirement by revising the second streamlined loan forgiveness application (SBA Form 3508S) to allow all borrowers with loans of $150,000 or less to use the form.

Loans of $150,000 or less represent 93 percent of the outstanding PPP loans. Despite the implementation of the streamlined loan forgiveness application for borrowers with loans of $150,000 or less, many smaller PPP lenders continue to express concerns to SBA that they do not have the technology or human resources to develop efficient electronic loan forgiveness platforms to process the new streamlined loan forgiveness application. 4 SBA has also become aware that because lenders are overwhelmed by the volume of PPP loans and are mindful of the statutory 60-day requirement for lenders to issue a forgiveness decision to SBA from receipt of the borrower's loan forgiveness application, lenders are limiting when loan forgiveness applications are accepted from borrowers, creating uncertainty among borrowers that they are going to have to start making payments on their PPP loans while they are waiting for their lenders to accept and process their loan forgiveness applications.

Additionally, SBA has heard concerns from PPP lenders of all sizes that the requirement for borrowers to submit and lenders to review at the time of forgiveness the revenue reduction documentation for Second Draw PPP Loans of $150,000 or less is delaying the forgiveness process for these borrowers.

To further simplify and streamline the forgiveness process for loans $150,000 or less, SBA is making two changes under this interim final rule. First, for Second Draw PPP Loans of $150,000 or less, where the borrower is required to provide revenue reduction documentation at the time of loan forgiveness, SBA is allowing lenders to use a COVID Revenue Reduction Score developed by SBA's contractor as an optional method to document the borrower's revenue reduction. Second, SBA is making available a direct borrower forgiveness process for lenders that choose to opt-in as an alternative method for processing borrower loan forgiveness applications for all PPP loans of $150,000 or less.

Among other things, to be eligible for a Second Draw PPP Loan, a PPP borrower is required to have experienced a revenue reduction of not less than 25% during one quarter of 2020 compared to the same quarter in 2019. Under section 7(a)(37)(I) of the Small Business Act, when a borrower applies for a Second Draw PPP Loan of $150,000 or less, the borrower can submit a certification that the borrower meets the revenue reduction standard, provided that on or before the date on which the borrower submits an application for loan forgiveness, the borrower produces adequate documentation that the borrower has met the revenue reduction standard. All Second Draw PPP Loan borrowers were required to certify on their loan applications (SBA Forms 2483-SD and 2483-SD-C) that they realized a reduction in gross receipts in excess of 25% relative to the relevant comparison time period.

The Second Draw PPP Loan IFR and the Loan Forgiveness and Loan Review IFR implementing the Economic Aid Act provide that if a borrower with a Second Draw PPP Loan of $150,000 or less did not produce documentation of revenue reduction at the time of application, the borrower must, on or before the date the borrower applies for loan forgiveness, submit to the lender documentation adequate to establish that the borrower experienced a revenue reduction of 25% or greater in 2020 relative to 2019, and such documentation may include relevant tax forms, including annual tax forms, or if relevant tax forms are not available, quarterly financial statements or bank statements. The rules also provide that where a borrower with a Second Draw PPP Loan of $150,000 or less does not provide documentation of revenue reduction with its loan application, the lender must perform a good faith review of the documents provided by the borrower at or before forgiveness, including the borrower's calculations and supporting documents. 5

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all The Boeing Company Model 737-8 and 737-9 airplanes. The NPRM published in the Federal Register on April 20, 2020 (85 FR 21791).

The NPRM was prompted by a report of an incident involving an SDOS actuator. The SDOS actuator is a telescopic, spring-loaded actuator that assists the mechanic in raising the engine fan cowl. Even when the actuator is extended (uncompressed), it retains energy in the spring (preloaded). In the incident, after an SDOS actuator with part number BOE-2001-901F was removed, a part separation occurred at the joint between the actuator's inner tube and its related “back end” bracket. The actuator came apart with spring-propelled force, injuring one of the maintenance personnel. This SDOS actuator used two roll pins and epoxy at this joint. The FAA has determined that this design, together with spring preload, caused these parts to break.

The FAA received a second report of a hazardous sudden extension of this actuator when, during improper removal of the SDOS actuator from the engine fan cowl while it was retracted, the SDOS actuator rapidly extended, with the potential to cause injury. This was possible because the fastener connecting the SDOS actuator to the fan cowl can be removed by cracking open the fan cowl and reaching under it. After the fastener was removed, the SDOS actuator was still connected to the engine fan case and was held in the retracted position by the “catch” hook, per the design. When the SDOS was rotated upward by hand, the catch hook released, and the SDOS actuator rapidly extended. The FAA has determined that the design of the SDOS actuator with part number BOE-2001-901H obscures the safety marker when the fan cowl is opened. The design of this SDOS actuator could, during maintenance, result in injury to maintenance personnel or damage to the airplane.

The manufacturer of the SDOS actuator, General Aerospace, has changed the design to have a stronger joint between the inner tube and the “back end” bracket that uses blind rivets rather than pins, together with an improved shape of the “catching” bracket. This redesign addressed the aforementioned part separation of the SDOS actuator, and the redesigned actuator became part number BOE-2001-901H. General Aerospace then modified part number BOE-2001-901H to include more detailed safety markers in new locations that display the warnings more clearly to maintenance personnel. That redesign addressed the aforementioned extension of the SDOS actuator from release of the catch hook. With the addition of the more detailed safety markers in the new locations, the SDOS actuator part number changed from BOE-2001-901H to BOE-2001-901J. General Aerospace Service Bulletin BOE-2001-901-71-01, dated November 2, 2019, which is referenced in Boeing Service Bulletin 737-71-1911, Revision 1, dated September 10, 2020, provides instructions for changing a BOE-2001-901H SDOS actuator to a BOE-2001-901J SDOS actuator.

The NPRM therefore proposed to require replacing each affected SDOS actuator with a new SDOS actuator, and verifying that the new safety markers are installed in the proper locations on the SDOS actuator.

The FAA is issuing this AD to address the possible separation of the SDOS actuator, and the visual obstruction of the SDOS actuator safety marker, either of which, during maintenance, could cause injury to maintenance personnel or damage to the airplane.

In the NPRM, the FAA proposed that the AD would apply to Boeing model 737-8 and 737-9 airplanes. Since then, the FAA determined that all Boeing model 737 airplanes powered by LEAP-1B engines (737 MAX airplanes), have engine fan cowls on which affected SDOS actuators could be installed. The affected SDOS actuators are rotable parts, so the future replacement of an SDOS actuator could reintroduce the unsafe condition. The 737 airplane models that are powered by LEAP-1B engines, and therefore that have fan cowls on which affected SDOS actuators could be installed, are currently the Model 737-8, 737-9, and 737-8200. 1 The airplane models on which affected actuators could be installed could include any 737 models which will be powered by LEAP-1B engines, such as the Model 737-7. Therefore the FAA has revised the applicability of this AD to include all Model 737 airplanes powered by LEAP-1B engines. The prohibition on the installation of an affected SDOS actuator similarly applies to all airplanes identified in the applicability of this AD.

The FAA gave the public the opportunity to participate in developing this final rule. The following presents the comments received on the NPRM and the FAA's response to each comment.

Boeing requested that the FAA mandate Boeing Special Attention Requirements Bulletin 737-71-1911 RB, Revision 1, dated September 10, 2020, because of various updates including removing retrofitted airplanes from the effectivity, group and configuration changes, and adapting certain instructions to allow work to be done on an individual fan cowl instead of all fan cowls at once. The revised service information does not add work for any airplane.

The FAA agrees. The service information mandated by this AD has been updated, to Boeing Special Attention Requirements Bulletin 737-71-1911 RB, Revision 1, dated September 10, 2020.

American Airlines and United Airlines requested that paragraph (g) of the proposed AD be changed to include the words “or later approved revisions” with regards to Boeing Special Attention Requirements Bulletin 737-71-1911 RB, dated November 26, 2019.

The requested revision to paragraph (g) of the proposed AD to allow use of later-approved revisions of the service information would be contrary to Office of the Federal Register (OFR) regulations regarding incorporation by reference. Specifically, incorporation by reference of a publication is limited to the edition of the publication that is approved by OFR. 1 CFR 51.1(f). To allow operators to use later revisions of the referenced document that are not approved by the OFR and identified in the AD, either the FAA must (1) seek OFR approval to incorporate a later revision of the service document and revise the AD to reference the approved later revision, or (2) operators must request approval to use a later revision as an alternative method of compliance with this AD under the provisions of paragraph (k) of this AD.

American Airlines requested clarification of paragraph (g) of the proposed AD. The commenter stated that it believes that the RC steps in both Boeing Special Attention Service Bulletin 737-71-1911 and Requirements Bulletin 737-71-1911 RB can be interpreted to mean that all steps of each Work Package are Required for Compliance. The company also states that the instruction to “Refer to the listed procedures in SB 737-71-1911 Original Issue or later approved revisions as an accepted procedure” found in each Work Package can be interpreted to mean that any part of the Work Package can be deviated from at the discretion of the operator, using the accepted procedures in the service information.

The FAA notes that Boeing's intention in including the multiple Work Packages, and the FAA's intention in mandating them, is to provide flexibility to the operator in the sequence of performing the mandated corrective actions. Each Work Package can be implemented one at a time. Each Work Package is defined by a unique combination of Group, Configuration, Engine 1 or Engine 2, and LEFT or RIGHT Fan Cowl descriptors. All of the Work Packages do not apply to every affected airplane.

The FAA further notes that both Boeing Special Attention Service Bulletin 737-71-1911 and Requirements Bulletin 737-71-1911 RB are consistent in their “RC: Start” and “RC: End” designations, which clearly delineate those Required Actions that are mandated by this AD. The instructions outside of the “RC: Start” and “RC: End” steps can be used to accomplish the required actions, but the AD does not authorize operators to use them as alternatives to the required actions. Where the service information specifies to “refer to” a recommended procedure, and only for those steps, operators may use an accepted alternative procedure.

The FAA has added paragraph (i) to this AD to provide credit for the previous accomplishment of Boeing Special Attention Requirements Bulletin 737-71-1911 RB, dated November 26, 2019.

American Airlines asked if the FAA requires a certain number of safety markers on SDOS part number (P/N) BOE-2001-901J units that have been changed from SDOS P/N BOE-2001-901H units. The AD requires that two P/N 12299 safety markers be installed on the SDOS actuator outer tube (cowl door side) if they are not already installed, but the commenter noted that there could be a third safety marker, P/N BOE-2001-713, already installed.

The FAA notes that an operator can comply with this AD by installing either (1) a P/N BOE-2001-901J actuator with its two original safety markers, or (2) a P/N BOE-2001-901H actuator that has been converted to a P/N BOE-2001-901J actuator with two new safety markers, with or without a third marker. The FAA has not changed this AD regarding this request.

American Airlines requested clarification on whether the operator would need to request an AMOC for the newly delivered airplanes that already have the SDOS part number BOE-2001-901J. The commenter noted that paragraph (g) of the proposed AD did not include Boeing Special Attention Requirements Bulletin 737-71-1911 RB, Revision 1, dated September 10, 2020.

The FAA notes that AMOCs will not be necessary for airplanes that are newly delivered with the P/N BOE-2001-901J SDOS actuator installed. As previously explained, paragraph (g) of this AD has been updated to include Boeing Special Attention Requirements Bulletin 737-71-1911 RB, Revision 1, dated September 10, 2020, which includes a revised effectivity list. No further change to this AD is necessary.

American Airlines and United Airlines requested that paragraph (c) of the proposed AD be amended to be limited to airplanes identified in the Effectivity section of Boeing Special Attention Requirements Bulletin 737-71-1911 RB. As an alternative, American Airlines requested that a sub-paragraph be added to paragraph (h) of the proposed AD to state that a review of maintenance and delivery records can be used to determine the installed SDOS actuator part number, provided the SDOS part number can be definitively determined from the records check.

The FAA notes that paragraph (c) of this AD now includes all Boeing Model 737 airplanes powered by LEAP-1B engines. Paragraph (g) of this AD now mandates Boeing Special Attention Requirements Bulletin 737-71-1911 RB, Revision 1, dated September 10, 2020. Because all Model 737 airplanes powered by LEAP-1B engines have engine fan cowls that, due to the rotability of the affected parts, are subject to the same SDOS actuator issue, paragraph (j) of this AD now prohibits the installation of SDOS actuators having part numbers BOE-2001-901F and BOE-2001-901H on all Model 737 airplanes powered by LEAP-1B engines.

American Airlines requested that the FAA allow use of .040 lockwire for the lock wire specified in steps 1(b) and 2(b) of the Accomplishment Instructions of Boeing Special Attention Service Bulletin 737-71-1911, dated November 26, 2019. American Airlines noted that the .040 lockwire is more common and readily available than .041 lockwire and would provide an equivalent level of safety. American Airlines expressed concern that if the FAA interpreted use of .041 lockwire as an RC step, the .040 lockwire could easily be mistakenly used due to the similarity to the .041 lockwire. The commenter requested that the FAA include an exception regarding this issue if appropriate.

The FAA notes that for the purposes of the SDOS actuator, .040 lockwire will function the same as .041 lockwire. The FAA further notes that Boeing Special Attention Requirements Bulletin 737-71-1911 RB, Revision 1, dated September 10, 2020, does not specify the use of lockwire in an RC step. Therefore, no change to this AD is necessary as a result of this comment.

Boeing requested an update to the SUMMARY and Discussion sections of the NPRM, and paragraph (e) of the proposed AD, to clarify that there were two different causes and corrective actions.

The FAA agrees and has revised the Summary, Background, and paragraph (e) of this AD to delineate the two corrective actions. The Background section of this final rule describes in detail the two incidents and how each resulted in the actuator's sudden and hazardous extension. To address the cause of each incident, this AD requires two actions, both of which are unchanged from the NPRM: (1) Replacing each affected SDOS actuator with a new SDOS actuator, and (2) verifying that new safety markers are installed in the proper locations.

Boeing stated that the number of affected U.S.-registered airplanes identified in the Costs of Compliance section depends on whether the NPRM covers only the SDOS attachment issue (in which case Boeing stated the number is correct), or also covers the safety marker issue (in which case Boeing stated an additional 240 airplanes would be affected).

The FAA notes that since this AD addresses both the SDOS actuator attachment issue and the safety marker issue, both types of affected SDOS actuators must be replaced, resulting in an additional 240 U.S.-registered airplanes that would be affected. The estimated cost for this AD has been updated to reflect a total of 400 U.S.-registered airplanes.

Boeing requested that the FAA revise the Costs of Compliance section of the NPRM to correct the labor cost calculation to $425 per airplane.

The FAA agrees that the NPRM provided an incorrect estimate for the number of work-hours to replace the SDOS actuators. The FAA has revised the costs accordingly in this final rule.

Southwest Airlines requested clarification as to whether the SDOS actuator part number BOE-2001-901H can be changed on wing to part number BOE-2001-901J using the General Aerospace Service Bulletin BOE-2001-901-71-01 referenced in the Boeing Special Attention Service Bulletin 737-71-1911, Revision 1, dated September 10, 2020. Southwest Airlines stated that it believes it is possible to do so.

The FAA notes that neither General Aerospace Service Bulletin BOE-2001-901-71-01, which is referenced in Boeing Special Attention Service Bulletin 737-71-1911, nor Boeing Special Attention Requirements Bulletin 737-71-1911 RB, Revision 1, both dated September 10, 2020, requires removing the SDOS actuator before applying the safety markers. No change to this final rule is necessary as a result of this comment.

Southwest Airlines asked whether the FAA was developing a requirement for ongoing inspections to make sure the safety markers are still present. The commenter stated that Boeing Special Attention Requirements Bulletin 737-71-1911 RB, dated November 26, 2019, does not mention inspecting for safety markers after the initial compliance.

The FAA notes that proper installation of the safety markers is intended to be permanent; therefore, no repetitive inspections of the safety marker installation are necessary. Because all Model 737 airplanes powered by LEAP-1B engines have engine fan cowls that, due to parts rotability, are subject to reinstallation of affected SDOS actuators, those airplanes are subject to the requirements of paragraph (j) of this AD, which prohibits the installation of SDOS actuators having part numbers BOE-2001-901F and BOE-2001-901H. The FAA has not changed this AD as a result of the comment.

United Airlines requested clarification of actions required for spare parts. The commenter asserted that spare parts should be handled in the same manner as parts found installed on the aircraft once they are removed and that Paragraph 3.B., Work Instructions, provided in the Boeing Special Attention Service Bulletin 737-71-1911, dated November 26, 2019, are intended to be performed at an aircraft level with some steps not being applicable.

The FAA disagrees and has not changed the AD with regard to this request. ADs in general do not apply directly to spare parts because under 14 CFR part 39, ADs are legally enforceable rules that apply only to products such as airplanes, and not to parts that are not installed on an airplane. The FAA can, by AD, prohibit or condition the installation of a part on a product. This AD prohibits the installation of SDOS actuators having part numbers BOE-2001-901F and BOE-2001-901H. However, the FAA notes that Boeing Special Attention Service Bulletin 737-71-1911, Revision 1, dated September 10, 2020, includes non-mandatory information on how to contact General Aerospace for shipping instructions for SDOS actuator part number BOE-2001-901F, although this AD does not require the return of any parts. Further, the BOE-2001-901H SDOS actuators can be changed to BOE-2001-901J SDOS actuators.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule with the changes described previously and minor editorial changes. The FAA has determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

The FAA also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

The FAA reviewed Boeing Special Attention Requirements Bulletin 737-71-1911 RB, Revision 1, dated September 10, 2020. This service information describes procedures for replacing each affected SDOS actuator with a new SDOS actuator and verifying that safety markers are installed. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 400 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2020-0268, dated December 4, 2020 (EASA AD 2020-0268) (also referred to as the Mandatory Continuing Airworthiness Information, or the MCAI), to correct an unsafe condition for all Airbus SAS Model A350-941 and -1041 airplanes. EASA AD 2020-0268 refers to Airbus A350 Airworthiness Limitations Section (ALS), Part 5, “Fuel Airworthiness Limitations (FAL),” Revision 04, dated May 29, 2020; and Airbus A350 ALS Part 5, “Fuel Airworthiness Limitations (FAL),” Variation 4.1, dated September 15, 2020. Airplanes with an original airworthiness certificate or original export certificate of airworthiness issued after September 15, 2020, must comply with the airworthiness limitations specified as part of the approved type design and referenced on the type certificate data sheet; this AD therefore does not include those airplanes in the applicability.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus SAS Model A350-941 and -1041 airplanes. The NPRM published in the Federal Register on March 26, 2021 (86 FR 16117). The NPRM was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The NPRM proposed to require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations, as specified in EASA AD 2020-0268. The NPRM also proposed to require, for certain airplanes, an update of the hydraulic monitoring system to include additional redundancy.

The FAA is issuing this AD to address the overheat failure mode of the hydraulic engine-driven pump (EDP), which may cause a fast temperature rise of the hydraulic fluid, and, if combined with an inoperative fuel tank inerting system, could lead to an uncontrolled overheat of the hydraulic fluid, possibly resulting in ignition of the fuel-air mixture of the affected fuel tank. See the MCAI for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA has considered the comment received. The Air Line Pilots Association, International (ALPA) stated that it supports the NPRM.

The FAA reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

EASA AD 2020-0268 describes new or more restrictive airworthiness limitations related to fuel tank ignition prevention and fuel tank flammability reduction.

This AD would also require accomplishing a certain airworthiness limitation using the following service information. This service information describes procedures for an update of the hydraulic monitoring system to include additional redundancy ( i.e., modifying the case-drain filter manifolds by installing new dual temperature sensors on the hydraulic EDP). These documents are distinct since they apply to different airplane models.

• Airbus Service Bulletin A350-29-P025, dated August 10, 2020.

• Airbus Service Bulletin A350-29-P027, dated November 24, 2020.

• Airbus Service Bulletin A350-29-P029, dated December 16, 2020.

This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 15 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA has determined that revising the existing maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, the agency estimates the average total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).

According to the manufacturer, some or all of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected operators. The FAA does not control warranty coverage for affected operators. As a result, the FAA has included all known costs in the cost estimate.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2020-0211, dated October 5, 2020 (EASA AD 2020-0211); and EASA AD 2021-0026, dated January 20, 2021 (EASA AD 2021-0026); (also referred to as the Mandatory Continuing Airworthiness Information, or the MCAI) to correct an unsafe condition for all Airbus SAS Model A350-941 and -1041 airplanes. EASA AD 2021-0026 refers to Airbus A350 Airworthiness Limitations Section (ALS) Part 4, Variation 5.1, dated July 22, 2020. Airplanes with an original airworthiness certificate or original export certificate of airworthiness issued after July 22, 2020, must comply with the airworthiness limitations specified as part of the approved type design and referenced on the type certificate data sheet; this AD therefore does not include those airplanes in the applicability.

The FAA issued AD 2019-20-01, Amendment 39-19754 (84 FR 55495, October 17, 2019) (AD 2019-20-01), to require, among other things, repetitive greasing of certain thrust reverser actuators (TRAs). For those TRAs identified as batch 02 in EASA AD 2018-0234R2, dated September 17, 2019 (which is required by AD 2019-20-01), the repetitive greasing task has since been incorporated into Airbus A350 Airworthiness Limitations Section (ALS), Part 4, Systems Equipment Maintenance Requirements (SEMR), Revision 05 Issue 02, dated June 25, 2020, which is specified in EASA 2020-0211. Accomplishing the actions in this AD would therefore terminate the repetitive greasing of batch 02 TRAs required by paragraph (g) of AD 2019-20-01.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus SAS Model A350-941 and -1041 airplanes. The NPRM published in the Federal Register on April 16, 2021 (86 FR 20086). The NPRM was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The NPRM proposed to require revising the existing maintenance or inspection program, as specified in EASA AD 2020-0211 and EASA AD 2021-0026.

The FAA is issuing this AD to address hazardous or catastrophic airplane system failures. See the MCAI for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA has considered the comment received. The Air Line Pilots Association, International (ALPA) stated its support for the NPRM.

The FAA reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

EASA AD 2020-0211 and EASA AD 2021-0026 describe new or more restrictive airworthiness limitations for airplane systems and safe life limits. These documents are distinct because they apply to different airplane configurations. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 15 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA has determined that revising the existing maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, the agency estimates the average total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued TCCA AD CF-2020-40, dated October 15, 2020 (also referred to as the Mandatory Continuing Airworthiness Information, or the MCAI), to correct an unsafe condition for certain MHI RJ Aviation ULC Model CL-600-2D15 (Regional Jet Series 705) and CL-600-2D24 (Regional Jet Series 900) airplanes. You may examine the MCAI in the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2021-0264.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain MHI RJ Aviation ULC Model CL-600-2D15 (Regional Jet Series 705) and CL-600-2D24 (Regional Jet Series 900) airplanes. The NPRM published in the Federal Register on April 7, 2021 (86 FR 17998). The NPRM was prompted by a report that the lower aft outboard supporting structure of galley 2 does not meet certification requirements for all flight and/or emergency landing loads. The NPRM proposed to require modifying the floor structure between certain fuselage stations. The FAA is issuing this AD to address the insufficient structural safety margin of galley 2 in case of hard landing or severe turbulence. This condition, if not corrected, could result in injury to the occupants and could limit access to the exit door during emergencies if the galley is displaced or fails structurally. See the MCAI for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA has considered the comment received. The Air Line Pilots Association, International (ALPA), indicated its support for the NPRM.

The FAA reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

MHI RJ has issued MHI RJ Service Bulletin 670BA-53-060, Revision A, dated September 17, 2020. This service information describes procedures for modifying the floor structure between fuselage station (FS) 379.00 and FS 394.00 at right buttock line (RBL) 37.75. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 1 airplane of U.S. registry. The FAA estimates the following costs to comply with this AD:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

The Fair Labor Standards Act (FLSA or Act) requires all covered employers to pay nonexempt employees at least the Federal minimum wage for every hour worked in a non-overtime workweek. 1 In an overtime workweek, for all hours worked in excess of 40 in a workweek, covered employers must pay a nonexempt employee at least one and one-half times the employee's regular rate. 2 The FLSA also requires covered employers to make, keep, and preserve certain records regarding employees. 3

The FLSA does not define “joint employer” or “joint employment.” However, section 3(d) of the Act defines “employer” to “include[ ] any person acting directly or indirectly in the interest of an employer in relation to an employee.”  4 Section 3(e) generally defines “employee” to mean “any individual employed by an employer”  5 and identifies certain specific groups of workers who are not “employees” for purposes of the Act. 6 Section 3(g) defines “employ” to “include[ ] to suffer or permit to work.”  7

In 1939, a year after the FLSA's enactment, the Department's Wage and Hour Division (WHD) issued Interpretative Bulletin No. 13, addressing, among other topics, whether two or more companies may be jointly and severally liable for a single employee's hours worked under the FLSA. 8 WHD recognized in the Bulletin that there is joint employment liability under the FLSA and provided examples of situations where two companies would or would not be joint employers of an employee. 9 For situations where an employee works hours for one company and works separate hours for another company in the same workweek, WHD focused on whether the two companies “are acting entirely independently of each other with respect to the employment of the particular employee” (in which case they would not be joint employers) or, “on the other hand, the employment by [the one company] is not completely disassociated from the employment by [the other company]” (in which case they would be joint employers and the hours worked for both would be aggregated for purposes of the Act). 10 WHD stated in the Bulletin that it “will scrutinize all cases involving more than one employment and, at least in the following situations, an employer will be considered as acting in the interest of another employer in relation to an employee: If the employers make an arrangement for the interchange of employees or if one company controls, is controlled by, or is under common control with, directly or indirectly, the other company.”  11

In 1958, the Department published a rule introducing 29 CFR part 791, titled “Joint Employment Relationship under Fair Labor Standards Act of 1938.”  12 Section 791.2(a) reiterated that there is joint employment liability under the Act and stated that the determination “depends upon all the facts in the particular case.”  13 It further stated that two or more employers that “are acting entirely independently of each other and are completely disassociated” with respect to the employee's employment are not joint employers, but joint employment exists if “employment by one employer is not completely disassociated from employment by the other employer(s).”  14 Section 791.2(b) explained that, “[w]here the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist in situations such as:

(1) Where there is an arrangement between the employers to share the employee's services, as, for example, to interchange employees; or

(2) Where one employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or

(3) Where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.”  15

In 1961, the Department amended a footnote in § 791.2(a) to clarify that a joint employer is also jointly liable for overtime pay. 16 Over the next several decades, WHD issued various guidance documents including Fact Sheets, opinion letters, as well as legal briefs reiterating the Department's position concerning joint employment. See, e.g., WHD Opinion Letter FLSA2005-15, 2005 WL 2086804 (Apr. 11, 2005) (addressing joint employment in a health care system comprised of hospitals, nursing homes, and parent holding company); WHD Opinion Letter, 1999 WL 1788146 (Aug. 24, 1999) (advising that private duty nurses were jointly employed by a hospital and individual patients); WHD Opinion Letter, 1998 WL 852621 (Jan. 27, 1998) (addressing the joint employment of grocery vendor employees stocking grocery shelves); WHD Opinion Letter FLSA-1089, 1989 WL 1632931 (Aug. 9, 1989) (advising that workers participating in an enclave program would be jointly employed by a participating business and a supervising workshop).

In 2014, WHD issued an Administrator's Interpretation (Home Care AI) addressing how joint employment under the FLSA applies to certain home care workers. 17 The Home Care AI explained that the FLSA's definitions of “employer,” “employee,” and “employ,” “and therefore the scope of employment relationships the Act covers, are exceedingly broad.”  18 The Home Care AI discussed application of 29 CFR 791.2 and stated that its “focus . . . is the degree to which the two possible joint employers share control with respect to the employee and the degree to which the employee is economically dependent on the purported joint employers.”  19 WHD recognized that, “when making joint employment determinations in FLSA cases, the exact factors applied may vary,” but also stated that “a set of factors that addresses only control is not consistent with the breadth of employment under the FLSA” because an analysis based solely on the potential employer's joint control “ `cannot be reconciled with [FLSA section 3(g)'s “suffer or permit” language], which necessarily reaches beyond traditional agency law.' ”  20 Accordingly, the Home Care AI applied a non-exclusive set of “economic realities factors” relating to the potential joint employer's control and other aspects of the relationship to provide guidance regarding the possibility of joint employment in numerous hypothetical scenarios specific to the home care industry. 21 WHD withdrew the Home Care AI on March 10, 2020.

In 2016, WHD issued an Administrator's Interpretation (Joint Employment AI) addressing joint employment generally under the FLSA and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), which uses the same definition of “employ” as the FLSA. 22 Relying on the text and history of FLSA section 3(g) and case law interpreting it, the Joint Employment AI explained that joint employment, like employment generally, is expansive under the FLSA and “notably broader than the common law concepts of employment and joint employment.”  23 The Joint Employment AI further explained that “the expansive definition of ‘employ’ as including ‘to suffer or permit to work’ rejected the common law control standard and ensures that the scope of employment relationships and joint employment under the FLSA and MSPA is as broad as possible.”  24 The AI described how “suffer or permit” or “similar phrasing was commonly used in state laws regulating child labor and was `designed to reach businesses that used middlemen to illegally hire and supervise children.' ”  25 The AI thus concluded that “the ‘suffer or permit to work’ standard was designed to expand child labor laws' coverage beyond those who controlled the child laborer,” “prevent employers from using ‘middlemen’ to evade the laws' requirements,” and ensure joint liability in a type of vertical joint employment situation (explained below). 26

The Joint Employment AI described and discussed two types of joint employment. It discussed horizontal joint employment, which exists where an employee is separately employed by, and works separate hours in a workweek for, more than one employer, and the employers “are sufficiently associated with or related to each other with respect to the employee” such that they are joint employers. 27 The Joint Employment AI explained that “the focus of a horizontal joint employment analysis is the relationship between the two (or more) employers” and that 29 CFR 791.2 provided guidance on analyzing that type of joint employment, and the AI provided some additional guidance on applying § 791.2. 28 The Joint Employment AI also discussed vertical joint employment, which exists where an “employee has an employment relationship with one employer (typically a staffing agency, subcontractor, labor provider, or other intermediary employer),” another employer is “receiv[ing] the benefit of the employee's labor,” and “the economic realities show that [the employee] is economically dependent on, and thus employed by,” the other employer. 29 The Joint Employment AI explained that the vertical joint employment analysis does not focus on examining the relationship between the two employers but instead “examines the economic realities” of the relationship between the employee and the other employer that is benefitting from the worker's labor. 30 The AI noted that “several Circuit Courts of Appeals have also adopted an economic realities analysis for evaluating vertical joint employment under the FLSA,” and that, “[r]egardless of the exact factors, the FLSA and MSPA require application of the broader economic realities analysis, not a common law control analysis, in determining vertical joint employment.”  31 The AI advised that, “because of the shared definition of employment and the coextensive scope of joint employment between the FLSA and MSPA,” the non-exclusive, multi-factor economic realities analysis set forth by the Department in its MSPA joint employment regulation should be applied in FLSA vertical joint employment cases to analyze the relationship between the employee and the other employer, and that doing so “is consistent with both statutes and regulations.”  32 The AI provided additional guidance on applying the analysis. 33 WHD withdrew the Joint Employment AI on June 7, 2017. 34

In January 2020, the Department published a final rule titled “Joint Employer Status Under the Fair Labor Standards Act,” which became effective on March 16, 2020 (Joint Employer Rule or Rule). 35 The Joint Employer Rule revised 29 CFR part 791 so that: § 791.1 contained an introductory statement; § 791.2 contained the substance of the Rule and addressed both vertical joint employment (which it referred to as “the first joint employer scenario”) and horizontal joint employment (which it referred to as “the second joint employer scenario”); and § 791.3 contained a severability provision. 36

For vertical joint employment, § 791.2(a)(1) stated that “[t]he other person [that is benefitting from the employee's labor] is the employee's joint employer only if that person is acting directly or indirectly in the interest of the employer in relation to the employee,” and then cited FLSA section 3(d)'s definition of “employer.”  37 The Joint Employer Rule provided that section 3(d) is the sole statutory provision in the FLSA for determining “joint employer status” under the Act—to the exclusion of sections 3(e) and 3(g). 38 The Joint Employer Rule further provided that the definitions of “employee” and “employ” in sections 3(e) and 3(g) “determine whether an individual worker is an employee under the Act.”  39 Citing section 3(d)'s definition of “employer” as including “any person acting directly or indirectly in the interest of an employer in relation to an employee,” the Rule stated that “only this language from section 3(d) contemplates the possibility of a person in addition to the employer who is also an employer and therefore jointly liable for the employee's hours worked.”  40 The Rule concluded that this language from section 3(d), “by its plain terms, contemplates an employment relationship between an employer and an employee, as well as another person who may be an employer too—which exactly fits the [vertical] joint employer scenario under the Act.”  41 The Rule relied on the Supreme Court's decision in Falk v. Brennan   42 and the Court of Appeals for the Ninth Circuit's decision in Bonnette v. California Health & Welfare Agency   43 to “support focusing on section 3(d) as determining joint employer status.”  44

Section 791.2(a)(1) of the Joint Employer Rule stated that “four factors are relevant to the determination” of whether the other employer is a joint employer in the vertical joint employment situation. 45 Those four factors were whether the other employer: (1) Hires or fires the employee; (2) supervises and controls the employee's work schedule or conditions of employment to a substantial degree; (3) determines the employee's rate and method of payment; and (4) maintains the employee's employment records. 46 The Joint Employer Rule stated that its four-factor test was “derived from” Bonnette. 47 In Bonnette, the Ninth Circuit affirmed a finding of vertical joint employment after considering whether the other employer: (1) Had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records. 48

The Joint Employer Rule's four-factor analysis deviated from the analysis in Bonnette in several ways. First, the Rule articulated the first factor as whether the other employer “[h]ires or fires the employee” as opposed to whether it had “the power” to hire and fire. 49 Section 791.2(a)(3)(i) stated that the “potential joint employer must actually exercise . . . one or more of these indicia of control to be jointly liable under the Act,” and that “[t]he potential joint employer's ability, power, or reserved right to act in relation to the employee may be relevant for determining joint employer status, but such ability, power, or right alone does not demonstrate joint employer status without some actual exercise of control.”  50 Second, the Joint Employer Rule modified the Bonnette factor requiring consideration of whether the potential joint employer supervises and controls work schedules or conditions of employment by adding the phrase “to a substantial degree.” This phrase was absent from the test articulated in Bonnette (although Bonnette found that, on the factual record before it, the potential joint employers “exercised considerable control” in that area). 51 Third, § 791.2(a)(2) stated that “[s]atisfaction of the maintenance of employment records factor alone will not lead to a finding of joint employer status,” however, Bonnette did not include this limitation to a finding of joint employer status. 52 Finally, § 791.2(b) stated that “[a]dditional factors may be relevant for determining joint employer status in this scenario, but only if they are indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee's work.”  53 Bonnette, however, stated that its four factors “provide a useful framework for analysis in this case,” but “are not etched in stone and will not be blindly applied,” and that “[t]he ultimate determination must be based `upon the circumstances of the whole activity.' ”  54

In addition to generally excluding factors that are not indicative of the potential joint employer's control over the employee's work, the Joint Employer Rule specifically excluded any consideration of the employee's economic dependence on the potential joint employer. 55 The Rule asserted that “[e]conomic dependence is relevant when applying section 3(g) and determining whether a worker is an employee under the Act; however, determining whether a worker who is an employee under the Act has a joint employer for his or her work is a different analysis that is based on section 3(d).”  56 The Rule further asserted that, “[b]ecause evaluating control of the employment relationship by the potential joint employer over the employee is the purpose of the Department's four-factor balancing test, it is sensible to limit the consideration of additional factors to those that indicate control.”  57

To determine horizontal joint employment, the Joint Employer Rule adopted the longstanding standard articulated in the prior version of 29 CFR 791.2 with “non-substantive revisions.”  58 Section 791.2(e)(2) stated that, in this “second joint employer scenario,” “if the employers are acting independently of each other and are disassociated with respect to the employment of the employee,” they are not joint employers. 59 It further stated that, “if the employers are sufficiently associated with respect to the employment of the employee, they are joint employers and must aggregate the hours worked for each for purposes of determining compliance with the Act.”  60 It identified the same three general examples of horizontal joint employment provided in the prior version of 29 CFR 791.2. 61

The Joint Employer Rule adopted additional provisions that apply to both vertical and horizontal joint employment. Section 791.2(f) addresses the consequences of joint employment and provided that “[f]or each workweek that a person is a joint employer of an employee, that joint employer is jointly and severally liable with the employer and any other joint employers for compliance” with the Act. 62 Section 791.2(g) provided 11 “illustrative examples” of how the Rule may apply to specific factual situations implicating both vertical and horizontal joint employment. 63

In February 2020, 17 States and the District of Columbia (the States) filed a lawsuit in the United States District Court for the Southern District of New York against the Department asserting that the Joint Employer Rule violated the Administrative Procedure Act (APA). 64 The Department moved to dismiss the lawsuit on the grounds that the States did not have standing. The district court denied that motion on June 1, 2020. 65 The district court issued an order on June 29, 2020, permitting the International Franchise Association, the Chamber of Commerce of the United States of America, the National Retail Federation, the Associated Builders and Contractors, and the American Hotel and Lodging Association (Intervenors) to intervene as defendants in the case. 66 The parties filed cross-motions for summary judgment, which the district court decided on September 8, 2020. 67

The district court vacated the Joint Employer Rule's “novel standard for vertical joint employer liability” because its “revisions to that scenario are flawed in just about every respect.”  68 The district court found that the Rule violated the APA because it was contrary to the law—specifically, it conflicted with the FLSA. 69 The district court identified three conflicts: The Rule's reliance on the FLSA's definition of “employer” in section 3(d) as the sole textual basis for joint employment liability; its adoption of a control-based test for determining vertical joint employer liability; and its prohibition against considering additional factors beyond control, such as economic dependence. 70 In addition, the district court found that the Rule was “arbitrary and capricious” in violation of the APA for three reasons: The Rule did not adequately explain why it departed from the Department's prior interpretations; the Rule did not consider the conflict between it and the Department's MSPA joint employment regulations; and the Rule did not adequately consider its cost to workers. 71

The district court concluded that the Joint Employer Rule's “novel interpretation for vertical joint employer liability” was unlawful under the APA and vacated all of § 791.2 except for § 791.2(e). 72 The court determined that, because the Rule's “non-substantive revisions to horizontal joint employer liability are severable,” § 791.2(e) “remains in effect.”  73

In November 2020, the Department and the Intervenors appealed the district court's decision vacating most of the Joint Employer Rule, and the appeal remains pending before the Court of Appeals for the Second Circuit, as discussed further below. 74

On March 12, 2021, the Department issued a notice of proposed rulemaking (NPRM) proposing to rescind the Joint Employer Rule. 75 The NPRM explained that the Department was considering rescinding the Joint Employer Rule for several reasons. 76 The Department decided to further consider the concerns raised by the district court in New York v. Scalia that the Rule's reliance on section 3(d) alone among the FLSA's provisions may be contrary to the FLSA's text and Congressional intent, particularly as the Department had never previously excluded FLSA sections 3(e) and (g) from the joint employment analysis and had instead applied an economic realities framework that included the definitions of “employ” or “employee” when determining joint employer liability, consistent with the approach taken by courts. 77 The Department was similarly concerned that the Rule's use of section 3(d) alone as the statutory basis for joint employment might not “easily encompass all scenarios in which joint employment may arise; multiple employers may `suffer or permit' an employee to work and could thus be joint employers under section 3(g) without one [employer] working `in the interest of an employer' under section 3(d).”  78

The Department also believed that it should consider and address the district court's conclusion that the Joint Employer Rule “unlawfully limits the factors the Department will consider in the joint employer inquiry” by focusing on a control-based test to the exclusion of economic dependence generally, certain economic dependence factors, and certain other considerations, as this approach is not consistent with the totality-of-the-circumstances economic realities standard that has generally been used by the courts. 79 The Rule's approach was also different than the Department's prior guidance on joint employment, and the Department acknowledged in the NPRM the district court's concerns that the Rule did not adequately explain the reasons for the significant departure. 80 Relatedly, the Department recognized in the NPRM that courts have generally declined to adopt the Rule's vertical joint employment analysis as a replacement for their existing analyses, indicating that the Rule had not provided the intended clarity and that rescinding the Rule would not be disruptive to stakeholders. 81 Finally, the Department was concerned that the Rule may not have sufficiently considered the negative effect that it would have on employees by reducing the number of businesses who were FLSA joint employers from which employees may be able to collect back wages due to them under the FLSA. 82 For all of these reasons, the Department proposed in the NPRM to rescind the entire Joint Employer Rule. 83

Although its filing deadline was not until February 19, 2021, the Department filed an opening brief in support of the Rule on January 15, 2021. The Intervenors filed their opening brief on the same day. On March 31, 2021, the Department filed a motion seeking to hold the appeal in abeyance in light of the published NPRM proposing to rescind the Joint Employer Rule. The Second Circuit denied the motion without explanation. The States filed their response brief on April 16, 2021. The Intervenors filed their reply brief on May 7, 2021. On May 28, 2021, the Department filed a reply brief. In its reply brief, the Department explained that the rulemaking proposing to rescind the Joint Employer Rule may moot the States' challenge to the Rule, making any resolution of the appeal unnecessary. The Department took no position on the merits of the Rule in its reply brief. The Department argued that if the Second Circuit resolves the appeal, it should reverse the district court's decision on the grounds that the States had no standing to challenge the Rule.

The Department received over 290 comments in response to the NPRM. State officials, members of Congress, labor unions, social justice organizations, worker advocacy groups, and individual commenters wrote in support of the Department's proposal to rescind the Joint Employer Rule, including a number of commenters who submitted comments with similar template language. These commenters supported rescission of the Rule predominantly on the basis that, in their view, the Rule improperly narrowed the test for joint employer status and conflicted with decades of Department interpretation, the text of the FLSA, and Congressional intent. Some suggested that the Rule did not align with the Supreme Court's observation that the FLSA's conception of employment is of “striking breadth.”  84 Commenters also noted detrimental effects of the Rule on vulnerable workers employed by contractors. Others pointed out that a court had vacated the Rule's vertical joint employment analysis and asserted that the horizontal joint employment test was intertwined with the vacated vertical joint employment provisions. Commenters also raised numerous other legal and policy criticisms of the Rule, discussed in greater detail below.

Various trade associations, business advocacy organizations, law firms, and individual commenters submitted comments opposing the Department's proposal to rescind the Joint Employer Rule. These commenters generally supported the Rule for, in their view, providing a clearer, common-sense standard for determining joint employer status. Several expressed the view that the Department was relying too much on a district court decision which the commenters believe to be erroneous, and encouraged the Department to stay this rulemaking pending the outcome of the appeal to the Second Circuit. They raised numerous other legal and policy arguments in defense of the Rule (or in objection to the proposed rescission), discussed in greater detail below. 85

Having considered the comments submitted in response to the NPRM, the Department has decided to finalize the rescission of the Joint Employer Rule. The Rule was inconsistent with the FLSA's text and purpose. The Rule's vertical joint employment analysis had never before been applied by WHD, was different from the analyses applied by every court to have considered the issue prior to the Rule's issuance, and has generally not been adopted by courts. The Rule's horizontal joint employment analysis, although consistent with prior guidance, was intertwined with the vertical joint employment analysis, and thus the Department is rescinding the entire Rule as explained below. The Department's response to commenter feedback on specific aspects of the proposed rescission is also provided below.

The NPRM observed that the statutory analysis and control-based test for vertical joint employment set forth in the Joint Employer Rule was different, to varying degrees, from the analyses and tests applied by every court to have considered joint employer questions prior to the Rule's issuance, as well as WHD's previous enforcement approach. The NPRM further noted that the Rule may have been impermissibly narrow due to its exclusive focus on control.

In the Rule, the Department stated that section 3(d) of the FLSA, which contains the definition of employer, is the sole statutory basis for determining joint employer status under the Act, and asserted that sections 3(e) and 3(g), which define “employee” and “employ,” respectively, are not relevant to determining joint employer status. 86 In the NPRM, the Department explained its concern that, upon further consideration, the text of section 3(d) alone may not easily encompass all scenarios in which joint employment may arise under the Act. 87

Multiple commenters representing employees agreed that by limiting the statutory basis of the vertical joint employment analysis to section 3(d) and ignoring the “suffer or permit” language of section 3(g)'s definition of “employ,” the Joint Employer Rule's test for vertical joint employment was unduly narrow and contrary to law and the Act. See, e.g., National Employment Lawyers Association. The North Carolina Justice Center, for example, stated that the “rule's narrow definition of who is responsible as an employer is contrary to the plain language of the statute's definition of `employ' contained in section 203(g) of the Act.” The International Brotherhood of Teamsters noted that the Rule impermissibly ignored the statutory definitions of “employ” and “employee,” which they asserted “are integral to the `employer' definition.” The Northwest Workers' Justice Project commented on the Rule's “novel” interpretation and asserted that “the Secretary is unable to point to a single authority for its unusual assertion that this section [3(d)] is the sole source of joint employment.” The Project's comment further criticized the Rule's statutory interpretation, observing that “[t]he word `joint' does not appear in § 203(d)” and opining that “the word `includes' in 29 U.S.C. 203(d) would suggest that there are other types of employers under the FLSA than those that meet the statutory definition of § 203(d).” Texas RioGrande Legal Aid noted that the Rule “grew from the belief that section 3(d) of the FLSA `is the touchstone for joint employer status' ”  88 but section 3(d) “is circular and provides little or no guidance as to the extent of employer-employee relationships.” A coalition of State Attorneys General (State AGs) commented that the Rule's vertical joint employment test “conflicted with the statutory text of the FLSA” because its “narrow interpretation of the term `employer' and its assertion that the definition of `employer' is the sole textual basis to determine joint employment were not faithful to the Act's definitions and Congress' intent in enacting them.”

Employers and trade associations generally commented that the Joint Employer Rule was consistent with the FLSA and case law and should be upheld. See, e.g., U.S. Chamber of Commerce, Littler Workplace Policy Institute (WPI). The Associated Builders and Contractors, for example, stated that it “strongly supports the [D]epartment's clarification [in the Rule] that only the definition of an `employer' in section 3(d) of the FLSA, 29 U.S.C. 203(d), determines joint employer status, not the definition of `employee' in section 3(e)(1) or the definition of `employ' as `to suffer or permit work' in section 3(g) of the FLSA, 29 U.S.C. 203(e)(1), (g).” This commenter further stated that “Section 3(d) of the FLSA is the sole section that defines `employer' (as a person `acting directly or indirectly in the interest of an employer in relation to an employee'), while Section 3(g)'s separate definition of `employ' (to `suffer or permit' to work) has been improperly cited by some courts as a basis for finding joint employer status.” The Society for Human Resource Management (SHRM) supported the Rule's statutory analysis, and commented that “by distancing itself from prior pronouncements espousing `economic dependence' as the hallmark for joint employment (or suggesting that certain business models are inherently joint employment), the Department appropriately returned the focus of the joint employment inquiry to the FLSA's statutory language.” Similarly, the Center for Workplace Compliance stated that “[w]hile sections 3(e)(1) and 3(g) would be relevant for determining whether an individual was an employee or independent contractor, they do not appear to be relevant to [the] determination of whether a second employer should be jointly liable under the FLSA.” The U.S. Chamber of Commerce supported the focus on section 3(d) and stated that “[u]nlike the broad definition of `employ', the definition of `employer' contains an active requirement that an entity be ` acting directly or indirectly in the interest of an employer in relation to an employee.' ”

Having reviewed the comments and considered the issue further, the Department has concluded that the Rule's interpretation that section 3(d) is the “sole” textual basis for determining joint employer status in vertical joint employment scenarios  89 potentially excluded important aspects of joint employment arrangements.

As an initial matter, the statutory language of section 3(d) itself raises concerns as to whether relying on that provision as the sole textual basis encompasses all scenarios in which joint employment may arise. Section 3(d) uses the word “includes” rather than the word “means.”  90 Under the Act, an “employer” “ includes any person acting directly or indirectly in the interest of an employer in relation to an employee,” “ includes a public agency,” but “ does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.”  91 Thus, by its own terms, section 3(d) is not exhaustive. Throughout section 3—the “definitions” section of the FLSA—Congress chose to vary its language for each definition between “means” and “includes,” and its use of “includes” when defining “employer” indicates that the definition that follows “includes” is not an exhaustive definition of “employer.”  92

Furthermore, the Joint Employer Rule limited joint employment in the vertical context to persons “acting directly or indirectly in the interest of the employer in relation to the employee,” confining joint employment to persons acting in the interest of a single employer. 93 In other words, the Rule assumed that an employee had one employer and that any other person that was liable was a joint employer. However, section 3(d) of the Act specifically defines a person “acting directly or indirectly in the interest of an employer in relation to the employee” as an “employer” itself. 94 Thus, while the Rule allowed only a single employer—“the employer”—to “suffer[ ], permit[ ], or otherwise employ[ ] the employee to work” in the vertical scenario, 95 section 3(d) itself provides for any number of other employers that can suffer, permit, or otherwise employ employees. 96 In light of this, the Joint Employer Rule did not even adhere to the statutory text—section 3(d)—which was its cited basis.

Additionally, there is case law indicating that section 3(d) was intended for the purpose of imposing responsibility upon the agents of employers, rather than to provide an exhaustive definition of joint employers under the Act. 97 The Rule acknowledged commenter arguments regarding this distinction within the Act's “definitions” section, as well as the import of section 3(d)'s “includes” language, 98 but did not address these arguments. Confining the analysis to only the Act's definition of “employer” resulted in an incomplete analysis of some potential joint employment scenarios.

The Department has also evaluated the Rule's singular focus on section 3(d) against the backdrop of the history and purpose of the “suffer or permit” language in section 3(g). As the Rule acknowledged, the Act's definition of “employ” was a rejection of the common law standard for determining who is an employee under the Act in favor of a broader scope of coverage. See Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (“[T]he FLSA . . . defines the verb `employ' expansively to mean `suffer or permit to work.' This . . . definition, whose striking breadth we have previously noted, stretches the meaning of `employee' to cover some parties who might not qualify as such under a strict application of traditional agency law principles.”) (citations omitted); Walling v. Portland Terminal Co., 330 U.S. 148, 150-51 (1947) (“But in determining who are `employees' under the Act, common law employee categories or employer-employee classifications under other statutes are not of controlling significance. This Act contains its own definitions, comprehensive enough to require its application to many persons and working relationships, which prior to this Act, were not deemed to fall within an employer-employee category.”) (citations omitted).

Section 3(g)'s “suffer or permit” language was intended to include as employers entities that used intermediaries to shield themselves from liability. 99 Rather than being derived from the common law of agency, the FLSA's definition of “employ” and its “suffer or permit” language originally came from state laws regulating child labor. 100 This language was “designed to reach businesses that used middlemen to illegally hire and supervise children.” Antenor v. D & S Farms, 88 F.3d 925, 929 n.5 (11th Cir. 1996). This standard was intended to expand coverage beyond employers who control the means and manner of performance to include entities who “suffer” or “permit” work. 101 Accordingly, the Rule's reliance solely on section 3(d), to the exclusion of section 3(g), was in tension with Congress' well-understood intent in enacting those provisions.

Moreover, the Joint Employer Rule's textual analysis needlessly bifurcated the statutory terms “employ” and “employer” in the vertical context. Specifically, it interpreted section 3(g) as defining who is an “employer” (person A is an employer of person B because person A suffers, permits, or otherwise employs person B to work), and section 3(d) as defining someone who is a “joint employer” (person C is a joint employer of employee B because person C acts directly or indirectly in the interest of employer A in relation to employee B). The Rule thus applied a different analytical framework to different employers. This bifurcated approach has not been used by any court nor is this stratification of employers supported by the text of the Act. Instead, all employers under the Act—joint employers or otherwise—are jointly and severally liable for wages owed. If anything, the Rule's section 3(d) analysis was backwards to the extent that it inquired whether entities which are higher in the “vertical” structure of a particular industry (such as a general contractor or staffing agency client) are “acting . . . in the interests of” acknowledged employers which are lower in the structure (such as a subcontractor or staffing agency). This bifurcation also makes it unclear which standard—“suffer or permit” under section 3(g) or the control-based standard under section 3(d)—should apply to which entity if, for example, both potential employers deny any employment relationship with a worker.

The Joint Employer Rule discussed the Supreme Court's decision in Falk v. Brennan   102 at length, relying on it to buttress its statutory interpretation argument. Upon further consideration, while the Court did address a joint employment situation in Falk v. Brennan, the Department now believes that the case's utility is limited. In its four-sentence discussion of joint employment, the Court explicitly noted the Act's definitions in both section 3(d) (“employer”) and section 3(e) (“employee”), and based its conclusion that a management company was a joint employer “[i]n view of the expansiveness of the Act's definition of `employer' and the extent of the [purported joint employer's] managerial responsibilities at each of the buildings, which gave it substantial control of the terms and conditions of the work of these employees.”  103 Moreover, Falk was an affirmance of a Fourth Circuit case, which noted that the Act's definitions (both 3(d) and 3(g)) were “very broadly cast” and that “courts have accordingly found an employment relationship for purposes of the Act far more readily than would be dictated by common law doctrines.”  104 The Court commented favorably on the Fourth Circuit's holding, stating that “the Court of Appeals was unquestionably correct in holding that [the management company] is also an employer . . . . ”  105 The Department's brief before the Supreme Court in Falk v. Brennan also argued that the petitioner building management company was a joint employer of the building's maintenance workers based on both section 3(d) and section 3(g). 106 The brief further stated that “[s]ince petitioners do the hiring and firing, they `employ' the workers within the plain meaning of this statutory definition.”  107 The Department's brief thus concluded that it is preferable to read the relevant statutory provisions of section 3(d) and section 3(g) together because, among other reasons, section 3(g) defined “employ” as it did with the intent of including as an employer entities that used intermediaries that employed workers but disclaimed that they themselves were employers of the workers. 108

Similarly, all of the circuit courts of appeals to have considered joint employment under the FLSA have looked to the economic realities test as the proper framework, and none have explicitly identified section 3(d) as the sole textual basis for joint employment. In particular, the case law heavily relied upon in the Joint Employer Rule from the First, Third, and Fifth Circuits, as well as the Bonnette decision itself, all apply an economic realities analysis when determining joint employment under the FLSA. 109 The Rule's approach also represented a significant shift from WHD's longstanding analysis; WHD had never excluded sections 3(e) and (g) from the joint employment analysis and had instead consistently applied an economic realities framework that did not exclude the definitions of “employ” or “employee” when determining joint employer liability, as discussed above.

In view of the foregoing, limiting the statutory basis for joint employment analyses solely to section 3(d), to the exclusion of the other highly relevant definitions of “employee” in section 3(e) and “employ” in section 3(g), was problematic and inhibited compliance with the Act.

For vertical joint employment scenarios, the Joint Employer Rule adopted a four-factor test focused on the actual exercise of control. Generally, it excluded factors that were not indicative of a potential joint employer's control, directed that additional factors may be considered “only if they are indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee's work,” and specifically excluded any consideration of the employee's economic dependence on the potential joint employer. 110 The NPRM questioned whether the four-factor test's emphasis on control was unduly narrow. 111 While recognizing that the tests for vertical joint employment differ among the circuit courts of appeals, the NPRM observed that “all courts consistently use a totality-of-the-circumstances economic realities approach to determine the scope of joint employment under the FLSA, rather than limiting the focus exclusively to control.”  112

Organizations representing employee interests generally opposed the four-factor test's emphasis on control and, in particular, criticized the Joint Employer Rule's requirement that actual control be exercised. The Shriver Center, for example, commented that “[e]ven under the more restrictive common-law employment test, the [Department]'s rule is too narrow: it fails to consider the right to control, a cornerstone of common-law employment determinations under long-standing Supreme Court and FLSA law.” See also Workplace Justice Project. The Construction Employers of America stated that the Rule's analysis “replaced the historic focus on economic dependence for determining joint employment with a four-factor test for assessing the level of control the potential joint employer has over the workers at issue.” The Northwest Workers' Justice Project noted that there is case law that presents a broader analysis than solely control, stating, “[o]f course, both Real [ v. Driscoll Strawberry Assocs., 603 F.2d 748 (9th Cir. 1979)] and Rutherford [ Food Corp. v. McComb, 331 U.S. 722 (1947)] articulate broader factors beyond control to be considered in determining employment under the FLSA.” The State AGs also commented that the control-based test for vertical joint employment set forth by the Rule was “contrary to the FLSA's text and case law” and that requiring the exercise of actual control was “inconsistent with the `suffer or permit' language of the statute.”

Organizations representing employers generally supported the Joint Employer Rule's four-factor test, and specifically commented that the requirement for an actual exercise of control would provide much-needed clarity for employers. The National Association of Home Builders, for instance, stated that the Rule “provides a clearer methodology for determining joint employer status with the focus on the actual exercise of power.” The U.S. Chamber of Commerce also supported the test's emphasis on the exercise of control, explaining that “contractual reservations of control are not probative of the relationship between the employer and the putative employee—the touchstone of the joint employer analysis—if the putative employer never exercises such control.” The National Restaurant Association and Restaurant Law Center also praised the test for similar reasons, commenting that the Rule “created a more appropriate and reliable standard using a multifactor balancing test that focuses on the economic realities of the potential joint employer's exercise of control over the employee's terms and conditions of employment. Because this test focuses on the actual and direct control over the employee's terms and conditions of employment, there is greater predictability and uniformity in the joint employment analysis.” See also Associated Builders and Contractors (“ABC therefore supports the [D]epartment's rule codifying the Bonnette test, with an additional emphasis on `actual,' as opposed to reserved but unexercised control by one employer over another's employees, as the test that is most consistent with the statutory definition of `employer.' ”); SHRM (“Ultimately, by ensuring that the inquiry is directed [at] a putative joint employer's actual control over critical terms of employment, the [Joint Employer Rule] stands on solid ground statutorily, and is consistent with the relevant Supreme Court authority.”).

Upon consideration of the comments received, the Department has concluded that the four-factor test's exclusive focus on control—and specifically, its mandate for an actual exercise of control—was not the most appropriate standard for vertical joint employment scenarios in view of the Act and case law. It is well-settled that in enacting the FLSA, Congress rejected the common law control standard for employment. In Darden, the Supreme Court stated that the FLSA defines “employ” “expansively” and with “striking breadth” and “stretches the meaning of `employee' to cover some parties who might not qualify as such under a strict application of traditional agency law principles.”  113

Although the specific factors may vary, all courts consistently use a totality-of-the-circumstances economic realities approach to determine the scope of joint employment under the FLSA. In addition to Bonnette, upon which the Rule heavily relied, multiple other circuit court decisions relied upon by the Rule also ground their joint employment analyses in the overarching totality-of-the-circumstances economic realities standard. 114 Court decisions that have not applied the Bonnette factors generally ground their joint employment analyses in the totality-of-the-circumstances economic realities standard as well. 115 Although some courts have applied an analysis that addresses only, or primarily, the potential joint employer's control, 116 these cases have nonetheless recognized that the control factors considered “ do not constitute an exhaustive list of all potentially relevant facts” and “should not be `blindly applied' ”; rather, a joint employment determination must consider the employment situation in totality, including the economic realities of the working relationship. 117 In contrast, the Rule provided that “[a]dditional factors may be relevant for determining joint employer status in this scenario, but only if they are indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee's work.”  118 While the exercise of “significant control” may certainly establish joint employment under the Act, no court has set this standard as the requirement for a finding of joint employment.

Especially problematic was the Rule's requirement for the actual exercise of control, a standard adopted by no court. The Rule stated that it was “not the Department's intent” to promulgate a rule narrower than the common law. 119 However, the Rule also plainly required an actual exercise of control, stating that “the regulation now makes clear that an actual exercise of control, directly or indirectly, is required for at least one of the factors and is the clearer indication of joint employer status.”  120 Under the common law standard, the mere right to control indicates a common law employment relationship; in contrast, the Rule required an actual exercise of control for at least one factor. 121 For this reason too, the Rule's test for vertical joint employment was in tension with the economic realities analysis used by courts across the country, which was intended to be more comprehensive than the common law standard. 122

The Department appreciates employers' desire for clarity and certainty regarding compliance under the Act. The Rule's narrowing of the analysis of control, however, was contrary to the Act and longstanding case law and thus did not guarantee enhanced clarity. Because the Rule's test (including the requirement for the actual exercise of control) conflicted with the tests used from every circuit, there likely was more uncertainty under this new interpretation.

The Department's NPRM noted that the Joint Employer Rule's vertical joint employment analysis, in addition to having never before been applied by a court, had never before been applied by WHD. 123 The Department indicated that it tentatively shared the concern that the Rule did not sufficiently take into account and explain departures from WHD's prior joint employment guidance, including its MSPA joint employment regulation and the withdrawn Home Care AI and Joint Employment AI. 124 The Department further indicated that this concern provided additional support for rescinding the Rule. 125

Texas RioGrande Legal Aid commented that the Joint Employer Rule conflicted with the MSPA joint employment regulation and that, “under the Rule, many agricultural employers could have been deemed joint employers under the MSPA but not under the FLSA,” causing “immense confusion” in its view “among the regulated community in the agricultural sector.” The State AGs stated that the Joint Employer Rule “departed from decades of agency interpretation of and guidance on [the] joint employer analysis,” including the Department 's vertical joint employment standard in its MSPA regulation, its Home Care AI, and its Joint Employment AI. According to the AGs, WHD's prior guidance had “rejected a `control-based test' like the one adopted by the Rule,” and the Rule did not adequately explain its departure from WHD's prior interpretations. The National Women's Law Center added that the Rule “set forth a new joint employment standard” that was different from WHD's previous enforcement approach and “departed from longstanding . . . [WHD] interpretations of covered employment and employer under the FLSA.”

Other commenters disputed the concerns raised by the Department in the NPRM. The Texas Public Policy Foundation, for example, asserted that it was “arbitrary for WHD to point to `inconsistencies' between the old agency guidance and the new agency guidance and assert that those inconsistencies, by themselves, justify rescission” because “[o]therwise, an agency would never be able to offer new or updated regulatory guidance.” Noting that the Department had described its concern as tentative in the NPRM, this commenter added that “[i]t is impermissible for WHD to withdraw the Joint Employer Rule based on WHD's `tentative' concern.”

Some commenters contrasted the Department's brief before the Second Circuit with the NPRM. The National Association of Home Builders commented that the Department's “rationale [in the NPRM] is contrary to the arguments” that the Department made in its opening brief to the Second Circuit in the appeal of the district court's decision vacating most of the Rule. Associated Builders and Contractors stated that the NPRM's reliance on the district court's decision “is arbitrary in light of the fact that, less than three months ago, the [D]epartment filed a brief to the court of appeals declaring that each of the same aspects of the district court decision was wrong and should be reversed.” It added that, “[i]n light of the pending nature of the appeal from the district court decision, at a minimum the NPRM should be held in abeyance pending the outcome of the appeal.” The International Franchise Association agreed, stating that “[n]otwithstanding the [Department's] own pending appeal from the district court's decision, the [Department] has proposed to rescind its [Joint Employer] Rule by relying on the same district court's opinion that it seeks to challenge on appeal at the Second Circuit.” It added that the Department's proposal to withdraw the Rule “should be withdrawn, or at the very least, held in abeyance until a final ruling in the pending Second Circuit appeal.” WPI also agreed, stating that “[e]ach aspect of the district court decision on which [the Department] now relies in proposing to rescind the [R]ule is refuted by [the Department]'s own brief to the Second Circuit.” It asserted that it was “arbitrary and capricious for [the Department] to rely on a court decision which it has only recently declared to be wrong, while that decision remains pending on appeal” and suggested that the Department “hold its NPRM in abeyance pending the appeal's outcome.”  126

In response, the Department agrees that “[a]gencies are free to change their existing policies as long as they provide a reasoned explanation for the change.”  127 When an agency changes its position, “it need not demonstrate . . . that the reasons for the new policy are better than the reasons for the old one.”  128 “But the agency must at least `display awareness that it is changing position.' ”  129 The agency's explanation is sufficient if “the new policy is permissible under the statute, . . . there are good reasons for it, and . . . the agency believes it to be better, which the conscious change of course adequately indicates.”  130 When explaining a changed position, “an agency must also be cognizant that longstanding policies may have `engendered serious reliance interests that must be taken into account.' ”  131 In such cases, the policy change itself does not need “further justification,” but “a reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy.”  132 For these reasons, “ `an unexplained inconsistency' in agency policy is `a reason for holding an interpretation to be an arbitrary and capricious change from agency practice.' ”  133

Having considered the comments and reviewed the issue further, the Department believes that the Joint Employer Rule did not provide a reasoned explanation for the new FLSA vertical joint employment standard that it adopted. As explained above in Section II.A.1., there was not a reasonable basis for relying exclusively on section 3(d) and completely excluding sections 3(e) and (g) when interpreting who is a joint employer under the FLSA. As further explained in Section II.A.2., there was not a reasonable basis for adopting a narrow standard limited to control for determining who is a joint employer under the FLSA. The Rule's stated desire to provide a uniform vertical joint employment standard may have been valid, 134 and the Department recognizes that there may be more than one permissible interpretive vertical joint employment standard under the FLSA; however, the standard that the Rule adopted was not permissible under the FLSA.

The Department also believes that the Joint Employer Rule did not sufficiently take into account prior WHD guidance. The Department's MSPA joint employment regulation  135 and its 1997 final rule  136 implementing it have been in effect for about 24 years. In keeping with MSPA and its legislative history, 137 the MSPA regulation expressly ties its joint employment analysis to the FLSA. The MSPA regulation provides that “[j]oint employment under the Fair Labor Standards Act is joint employment under the MSPA”  138 and sets forth a multi-factor analysis for determining vertical joint employment that is different than the Rule's analysis. 139 The Joint Employer Rule, however, did not address or account for any differences between its new regulatory standard and MSPA's existing regulatory standard or any effects that it may have on joint employment under MSPA. In addition, the Department's interpretive guidance in the Home Care AI and the Joint Employment AI rejected a joint employment analysis that was limited to control, and those AIs relied on FLSA sections 3(e) and (g) in addition to section 3(d). 140 Although the Home Care AI and the Joint Employment AI were withdrawn before the effective date of the Joint Employer Rule, the Department did not address or sufficiently account for its departures from their analyses in the Rule. In summary, the Department was and is allowed to change its interpretation of joint employment under the FLSA; however, the Rule failed to account for and address inconsistences with WHD's prior and existing guidance, which is an additional reason to rescind the Rule.

In response to comments asserting an inconsistency between the Department's opening brief to the Second Circuit in the appeal of the district court's decision vacating most of the Joint Employer Rule and its NPRM proposing to rescind the Rule, the Department's filings with the Second Circuit have been consistent with the status of this rescission rulemaking. The Department filed its opening brief with the Second Circuit on January 15, 2021—prior to any reconsideration of the Rule and well before the deadline for filing the brief. Following the Department's NPRM in March proposing to rescind the Rule, the Department requested that the Second Circuit hold the appeal in abeyance while this rulemaking progressed. Although the Second Circuit denied the request, asking it to hold the appeal in abeyance was consistent with this rulemaking.

In addition, the Department filed a reply brief with the Second Circuit on May 28, 2021, in which it took “no position” regarding “the merits of the Joint Employer Rule” in light of this pending rulemaking. In the reply brief, the Department noted that completion of this rulemaking may moot the States' challenge to the Rule and requested that the Second Circuit, if it resolves the appeal at all, reverse the district court's decision solely on the grounds that the States lacked standing to challenge the Rule. Accordingly, the Department's position in the pending Second Circuit appeal has been consistent with the status of this rescission rulemaking; the Department stopped defending the merits of the Rule before the Second Circuit consistent with its concerns with the Rule as set forth in the NPRM proposing to rescind the Rule. Finally, issuing this final rule now rather than waiting for the Second Circuit to resolve the appeal is consistent with the Department's position in its reply brief. Although the district court's decision vacating the Rule's vertical joint employment analysis was a primary consideration for proposing rescission as noted in the NPRM, the Department's decision to rescind the Rule as set forth herein is independent from the district court's decision and represents its reasoned interpretation of the FLSA as supported by case law, regardless of the Second Circuit's ultimate resolution of the appeal.

The NPRM stated that courts have generally declined to adopt the Joint Employer Rule's vertical joint employment analysis since its promulgation. 141 The NPRM further stated that, in light of this judicial landscape, rescinding the Joint Employer Rule would not be disruptive. 142 The NPRM added that WHD does not believe that it would be difficult or burdensome to educate and reorient its enforcement staff if the Rule is rescinded. 143

The State AGs agreed in their comment that, “based on the judicial landscape,” rescinding the Joint Employer Rule “would not be disruptive.” They added that it was “not surprising” that only two district court decisions had adopted the Rule's vertical joint employment analysis given that, in their view, the Rule's analysis “runs counter to Supreme Court precedent” and “conflicts with numerous court of appeals decisions interpreting joint employment.” Texas RioGrande Legal Aid added that, “aware of the Rule's mismatch with the FLSA's text and purpose, courts would have been likely to continue to eschew the Rule's framing in favor of their established formulations of the multi-factor analysis.”

Having considered the comments and reviewed the issue further, the Department believes that courts' general non-adoption of the Joint Employer Rule's vertical joint employment analysis provides additional support for rescinding the Rule. As a general matter, courts have declined to adopt the Joint Employer Rule's analysis. In addition to the Southern District of New York's decision to vacate the Rule's vertical joint employment analysis, other courts have declined to adopt the Rule's analysis for similar reasons. 144 The Department is aware of two FLSA cases in which a court has adopted and applied the Rule's vertical joint employment analysis. 145 Both cases were district court decisions from the Tenth Circuit, which has not issued a definitive decision regarding the analysis to apply in FLSA vertical joint employment cases. Neither case applied the rule in a uniform manner, relying on additional factors or stating them differently.

Moreover, as the Joint Employer Rule acknowledged, a number of circuit courts of appeals had previously established analytical frameworks for vertical joint employment cases, and all of these analyses are different from the analysis in the Joint Employer Rule. 146 Notwithstanding the Rule, district courts in those circuits have generally continued to apply binding precedent from their circuit courts of appeals when deciding FLSA vertical joint employment issues—often with little, if any, meaningful discussion of the Rule's analysis. 147 In sum, despite the Joint Employer Rule's stated purpose of “promot[ing] greater uniformity in court decisions,”  148 there has been no widespread adoption of the Rule's vertical joint employment analysis, and the Rule has not significantly affected judicial analysis of FLSA joint employment cases.

Additionally, rescinding the Joint Employer Rule would not be disruptive for WHD. WHD has not issued subregulatory guidance that would need to be withdrawn or modified as a result of the rescission. For all of these reasons, rescission of the Rule will have little effect on courts' and WHD's analyses in FLSA vertical joint employment cases.

The Joint Employer Rule acknowledged that, although it would not change the wages due an employee under the FLSA in the vertical joint employment scenario, “it may reduce the number of businesses currently found to be joint employers from which employees may be able to collect back wages due to them under the Act.”  149 The Rule further acknowledged that, “[t]his, in turn, may reduce the amount of back wages that employees are able to collect when their employer does not comply with the Act and, for example, their employer is or becomes insolvent.”  150 One commenter, the Economic Policy Institute (EPI), submitted a quantitative analysis of the monetary amount that it estimated would transfer from employees to employers as a result of the Rule. 151 In response, the Rule stated that, although it “appreciates EPI's quantitative analysis,” it “does not believe there are data to accurately quantify the impact of this [R]ule.”  152 The Rule added that it “lacks data on the current number of businesses that are in a joint employment relationship, or to estimate the financial capabilities (or lack thereof) of these businesses and therefore is unable to estimate the magnitude of a decrease in the number of employers liable as joint employers.”  153 The Rule discussed in a qualitative manner some potential benefits to employees, such as “promot[ing] innovation and certainty in business relationships” and encouraging businesses to engage in certain practices with an employer that “could benefit the employer's employees.”  154 The Rule did not otherwise consider any potential costs to workers.

Many commenters expressed concerns that the Joint Employer Rule would incentivize companies to expand their use of temporary staffing agencies, contractors, and subcontractors rather than employing workers directly, which is a concern that the Department shares. Congressman Bobby Scott and 78 other Members of Congress wrote that the Rule “promotes business models that rely on subcontracting with businesses that pay lower wages to cut costs or with thinly capitalized lower level businesses that cut corners on FLSA compliance.” As several commenters stated in comments that used template language, the number of workers employed through temporary staffing agencies “has increased dramatically in recent years,” especially in “low-wage, `blue-collar' occupations.” The National Employment Law Project (NELP) stated that “[t]emporary and staffing agency work hours have grown 3.9 times faster than overall work hours, and temporary and staffing agency jobs have grown 4.3 times faster than jobs overall.” Several commenters identified particular industries that have experienced especially high growth in outsourcing and subcontracting, including janitorial services, construction, agriculture, manufacturing, warehousing and logistics, hospitality, and waste management. In particular, NELP noted that outsourcing of janitorial services “has grown dramatically over the past two decades, resulting in an estimated 37 percent of janitorial workers hired through labor contractors rather than directly by the company at which they work.” NELP also reported that 58 percent of security guard positions are outsourced.

Several commenters asserted that the increase in temporary, staffing agency, and subcontracting jobs is detrimental to workers, because on average, “temporary help agency workers earn 41 percent less” than workers in “standard work arrangements,” they “experience large benefit penalties relative to their counterparts in standard work arrangements,” and although their jobs tend to be more hazardous than those of “permanent, direct hires,” “they often receive insufficient safety training and are more vulnerable to retaliation for reporting injuries than workers in traditional employment relationships.” Some commenters, including the Public Justice Center and NELP, noted that temporary staffing agencies must compete with each other “on the one major cost they can control—labor costs,” and this “competitive pressure drives down wages and incentivizes cutting corners through violating labor standards like minimum wage and health and safety laws.” NELP also stated that “[t]emporary staffing agencies consistently rank among the worst large industries for the rate of wage and hour violations.” The Public Justice Center described the industry's frequent use of a “triangular employment relationship through which the staffing agency acts as temp workers' employer even though the worksite company determines the assignments and working conditions,” thus allowing the worksite company to gain the benefits of employing workers while avoiding many of the legal responsibilities. In addition, several commenters, including the Communications Workers of America, the Kentucky Equal Justice Center, and the Workplace Justice Project, stated that individuals who work for staffing agencies or subcontractors often have trouble identifying their actual employer when a dispute over payment or working conditions arises. Other commenters, such as the National Employment Lawyers Association, wrote that holding a company responsible as a joint employer incentivizes that company to “provide better oversight of working conditions, to ensure that child labor, minimum wage and overtime rules are followed.”

Many commenters also stated that the increased use of temporary staffing agencies disproportionately impacts people of color and women. NELP, the Public Justice Center, and the State AGs reported that Black workers comprise 12.1 percent of the overall workforce, but 25.9 percent of temporary help agency workers, while Latino workers make up 16.6 percent of the total workforce, but 25.4 percent of temporary help agency workers. NELP and the Public Justice Center explained that, because temporary workers “are especially vulnerable to illegal conduct such as wage theft, unsafe working conditions, and discrimination,” an increase in temporary work can “exacerbate occupational segregation, income inequality, and the wealth gap for people of color.” In addition, the National Women's Law Center commented that women are “broadly overrepresented in low-paid jobs,” and noted that women working for “contract firms in full-time jobs typically earn 17 percent less than women in traditional employment arrangements and 42 percent less than full-time male workers provided by contract firms.” In addition, Congressman Bobby Scott and 78 other members of Congress noted that “because the Equal Pay Act of 1963 shares the FLSA's definitions of employment, the [Joint Employer Rule] would make it harder for women to hold all responsible employers accountable when bringing equal pay claims.” The National Women's Law Center also pointed out that the FLSA requires employers to provide breastfeeding workers with adequate time and safe space to pump at work, but in the case of temporary or subcontracted workers, the worksite is often controlled by a contracting entity, thus creating a potential barrier to the worker's ability to pump.

Numerous organizations that provide legal representation to workers shared accounts of particular cases where, in their view, their clients would not have been able to recover back wages owed but for the fact that courts applied broader joint employer liability principles than those set forth in the Joint Employer Rule. For example, the Equal Justice Center represented approximately 30 individuals who worked for a small cleaning company to provide janitorial services at outlets of a big-box store in the Austin area. The workers sued for unpaid wages and overtime premiums, but the cleaning company went out of business. However, the workers succeeded in establishing that the big-box store was a joint employer based on the economic realities test derived from Rutherford and defined by the Fifth Circuit in Wirtz v. Dr. Pepper Bottling Co. 155 According to the commenter, the workers successfully asserted that because they “consistently and exclusively cleaned the [big box] company's stores, at hours dictated by the stores' schedules and according to standards set by the company's management, the [big box] company could be a joint employer under the FLSA.” In contrast, the commenter believed that the big box store likely would not have been a joint employer under the Joint Employer Rule. In another case, the North Carolina Justice Center represented “hundreds of janitorial workers” who cleaned public school buildings through a subcontractor that went bankrupt, failing to pay several weeks of wages. According to the Center, the workers were able to recover back wages from the school district and the contractor as joint employers. The Center asserted that under the Joint Employer Rule, however, “it is highly unlikely either the contractor or the district would be liable for the failure to pay minimum wage and overtime.” In addition, NELP discussed a case involving warehouses owned by Wal-Mart, which contracted with Schneider Logistics to operate the warehouses, which in turn contracted with two staffing companies to provide labor. After the warehouse workers sued for violations of the FLSA, Wal-Mart moved for summary judgment that it was not a joint employer. The district court, applying the Bonnette and Torres-Lopez factors, determined that several factors in addition to Wal-Mart's control over the plaintiffs' working conditions suggested that Wal-Mart could be found to be a joint employer, including that the plaintiffs performed piecework that did not require initiative, judgment, or foresight; there was permanence in the plaintiffs' work for Wal-Mart; and the service performed by the plaintiffs was an integral part of Wal-Mart's business. 156 Thus, the court denied Wal-Mart's motion. 157 According to NELP, the case eventually settled, but the staffing companies could afford to pay only 7.5 percent of the settlement amount. However, “because the court took into account the realities of the workers' relationship with Schneider and Wal-Mart, the workers were able to obtain damages from these parties.”

Other commenters also emphasized the importance that joint employment liability plays in the recovery of back wages. For example, the Northwest Workers' Justice Project described a case in which workers who were employed by a contractor to cut, bag, and stock fruit at H-E-B grocery stores in Texas and who sued for minimum wage and overtime violations. According to the Project, the workers, mostly immigrants and women, worked on location only at H-E-B stores, often for 50 hours or more per week, and were paid per bag of produce sold, which never amounted to minimum wage. The case was apparently brought in the U.S. District Court for the District of Texas, which applies the Fifth Circuit's “economic realities” test requiring the consideration of several factors to determine joint employer liability. 158 H-E-B initially denied responsibility as a joint employer, but ultimately settled, which the Project reported would not have been possible “[w]ithout joint employment.” In addition, Justice at Work (Massachusetts), the Legal Aid Society, the Public Justice Center, the United Brotherhood of Carpenters and Joiners, and the Worker Justice Center of New York reported that they have brought or observed numerous cases in the construction industry where a subcontractor labor broker disappears or refuses to pay, and the next tier contractor denies responsibility, leaving workers without pay.

Some organizations that provide legal assistance to agricultural workers commented that joint employment is particularly important in the agricultural industry. Texas RioGrande Legal Aid reported that “[j]oint employer issues arise frequently in the agricultural sector because the sector is riddled with middlemen: Undercapitalized farm labor contractors who pay the workers while furnishing their labor to fixed-site farm operators.” The organization has found that “farmworkers' attempts to seek unpaid wages from farm labor contractors, as opposed to fixed-site agricultural employers, are frequently futile,” in part because “[f]arm labor contractors are often undercapitalized and unable to meet their wage obligations because of disadvantageous deals made with growers.” NELP pointed to a study conducted by EPI that found that from 2005 to 2019, farm labor contractors accounted for 14 percent of agricultural jobs, but 24 percent of all employment law violations in agriculture. Texas RioGrande Legal Aid noted that DOL's H-2A regulations require farm labor contractors petitioning for temporary labor certification to post bonds as a “ ` necessary compliance mechanism' to ensure that the labor contractor pays the H-2A workers their wages,” because many of these contractors are unreliable. In addition, the Centro de los Derechos del Migrante explained that, while MSPA “protects many farmworkers above and beyond the FLSA floor, nearly half a million migrant agricultural workers in the H-2A program are excluded from” the protections of MSPA, “and rely instead on the FLSA.” The organization asserted, however, that “[b]y opening loopholes in the FLSA not found in [MSPA], the 2020 Rule would incentivize employers to sidestep . . . [MSPA]'s protections by hiring workers to whom only the FLSA applies, driving down standards across the entire agricultural industry.” It further noted the history of diminished legal protections for agricultural workers, which was “born of a dark history of racial discrimination,” and argued that reducing protections for these workers would perpetuate that legacy, as 92 percent of H-2A workers are Mexican.

In contrast, several commenters who oppose rescinding the Joint Employer Rule asserted that the Rule promotes job growth. WPI stated that, “[d]uring the `period in which [the Department] consistently applied the `right of control' factors identified with the Bonnette test of the Ninth Circuit, significant job growth took place in the industries represented by WPI,” including temporary staffing, construction, retail, and hospitality. It is not clear what period of time WPI is referring to, as all of the statistics cited by WPI predate the effective date of the Joint Employer Rule. Moreover, the Joint Employer Rule was in effect for only a brief period of time, and WPI did not present any direct evidence that job growth during that short window of time was driven, in whole or in part, by the adoption of the Rule. Given data limitations, it would not be possible to determine whether job growth in these industries was related to the Joint Employer Rule. Further, as the comments discussed above indicate, to the extent that jobs with temporary staffing agencies or thinly capitalized subcontractors have replaced standard employment arrangements, such a trend is disadvantageous to workers in many respects, and could have a particularly negative effect on people of color and women. The Washington Legal Foundation also generally asserted that the Joint Employer Rule fosters job growth, and contended that logically, allowing the Rule to remain in place would result in increased job creation, higher salaries, and no wage theft. However, the Department does not believe that allowing the Rule to remain in effect would have clearly lead to the creation of more, higher-paying jobs free of wage theft, for the reasons discussed by the commenters above. Instead, the Department agrees with the commenters who stated that the Rule would have further incentivized companies to source labor through temporary staffing firms or subcontractors, rather than hiring employees directly, which tends to result in lower pay and fewer benefits, and can leave employees without recourse for unpaid wages when the staffing firm or subcontractor is unable or unwilling to pay.

Upon consideration of the comments, the Department concludes that the Joint Employer Rule did not satisfactorily consider the costs to employees. This conclusion is premised in part on WHD's role as the agency responsible for enforcing the FLSA and for collecting back wages due to employees when it finds violations, as well as a recent Presidential Memorandum instructing the Director of the Office of Management and Budget to recommend new procedures for regulatory review that better “take into account the distributional consequences of regulations.”  159 As noted in the economic analysis, rescinding the Joint Employer Rule could help protect the well-being and economic security of workers in low-wage industries, many of whom are immigrants, people of color, and women, because FLSA violations are more severe and widespread in low-wage labor markets. 160 The Department believes that the Joint Employer Rule would have made it more difficult for workers to collect back wages owed and incentivized workplace fissuring, 161 which are serious concerns that may have a disproportionate impact on low-wage and vulnerable workers. The Rule's failure to weigh these concerns is an additional reason for its rescission.

In addition to discussing the issues identified in the NPRM, commenters also noted other ways in which rescission of the Joint Employer Rule would affect various stakeholders. In particular, most commenters opposed to rescission of the Rule emphasized the importance of clarity and predictability to the business community. However, the Department generally believes that the impact of rescission on the business community and other stakeholders will not be substantial because the Rule has not been widely adopted by the courts. Furthermore, for the reasons set forth above, the Department believes that the Rule should be rescinded because it was inconsistent with the text and purpose of the FLSA.

Many commenters asserted that the Joint Employer Rule provided clarity and predictability to the regulated community, and argued that rescinding the Rule would lead to confusion and uncertainty. The U.S. Chamber of Commerce stated that the Rule “brought needed clarity and consistency to a key issue that had long vexed employers and the WHD.” The FreedomWorks Foundation wrote that a “lack of clarity surrounding issues of joint employment [is] especially harmful to small businesses, which employ almost half of Americans and often do not have the resources to secure top-notch legal advice,” a concern echoed by the National Federation of Independent Businesses (NFIB). However, the Department does not agree that leaving the Joint Employer Rule in place would have provided increased clarity and certainty to the regulated community. As discussed above, the Rule conflicted with the text and purposes of the FLSA and was not widely adopted by the courts. 162 Thus, even if the Second Circuit Court of Appeals were to reverse the district court decision vacating the Rule on standing grounds, it is likely that many courts would still reject the Rule and continue to rely on prior precedent. As such, leaving the Joint Employer Rule in place would not have established a uniform standard consistently applied by all courts across the country. Because it conflicted with established precedent in the circuits, the Rule presented employers with the difficult choice of conducting their business in a manner consistent with circuit precedent or with the Rule. Furthermore, because employers had to consider circuit precedent as no circuit had adopted the Rule, the Rule likely provided little clarity. Accordingly, the Department does not agree that rescinding the Rule will result in significantly less clarity and uncertainty for the regulated community. More fundamentally, because the regulation conflicted with the text and purpose of the FLSA, it should be rescinded.

Other commenters expressed concerns that rescinding the Joint Employer Rule could impose additional costs on businesses. The Texas Public Policy Foundation asserted generally that rescission would “result in more employers being deemed to be joint employers, raising operating expenses for those employers.” Again, because the Rule was not widely adopted by courts, the Department does not expect that the Rule's rescission will substantially increase prospective joint employers' costs. In addition, the Department believes that the Rule's rescission will continue to incentivize businesses at the top of a vertical industry structure to ensure that labor suppliers and other potential joint employers comply with the FLSA; as long as they do so, businesses at the top will not incur the additional cost of paying the joint employer's employees. Other commenters, such as the National Retail Federation, expressed concern that rescinding the Rule would discourage businesses “from entering into beneficial contractual relationships with third-party business parties, inhibiting business-to-business collaboration.” Commenters like the National Restaurant Association and Restaurant Law Center stated that rescinding the Rule could negatively impact businesses that use a franchising model. But the vast majority of these businesses operate in jurisdictions that have not adopted the Joint Employer Rule, so their calculation of potential liability will not change. Furthermore, the current law governing joint employment allows businesses to enter into beneficial relationships without creating joint employment liability. In fact, as commenters both supporting and opposing rescission noted, the growth of temporary staffing, independent contractors, and franchise relationships outpaced standard employment in many respects in the years before the Joint Employer Rule was introduced. See, e.g., International Franchise Association (asserting that after the financial crisis, from 2009-12, “employment in the franchise sector grew 7.4%, versus 1.8% growth in total U.S. employment”); NELP (asserting that since 2009, “[t]emporary and staffing agency work hours have grown 3.9 times faster than overall work hours, and temporary and staffing agency jobs have grown 4.3 times faster than jobs overall;” and noting that “staffing and temporary help services provided 11.3 percent of all manufacturing employment in 2015, up from just 2.3 percent in 1989”). This indicates that the prior legal landscape did not pose a significant hindrance to the formation of these types of relationships. 163

Commenters who support the Rule also asserted that rescinding the Rule would make companies less likely to offer assistance to related companies, such as a franchisor offering sexual harassment training materials to a franchisee, for fear of becoming a joint employer. These commenters pointed out that this type of assistance can benefit workers by, for example, reducing sexual harassment in the workplace or improving workplace safety. 164 However, the commenters did not cite any court decision finding that a company is a joint employer primarily on this basis, while at least some courts have not regarded the provision of training assistance as strong evidence of a joint employer relationship. 165 Furthermore, to the extent that a court might consider this type of assistance as part of the joint employer analysis, it would be merely one aspect of one factor among many that the courts use to assess whether a joint employer relationship exists, and no one factor is dispositive. Moreover, as the comments discussed above noted, the prospect of joint employer liability can incentivize a company to “provide better oversight of working conditions, to ensure that child labor, minimum wage and overtime rules are followed.” See, e.g., National Employment Lawyers Association. The Department agrees with this assessment.

Some commenters expressed particular concern as to how rescinding the Joint Employer Rule would affect the construction industry. The Associated Builders and Contractors wrote that the construction industry consists “primarily of specialized, separate employers who come together [to work] on specific construction projects,” and “standard construction methods require project owners and/or prime contractors to exercise routine control over the [work] site in ways that indirectly affect many employees' terms and conditions of employment,” thus potentially leading to joint employer liability. The National Association of Home Builders asserted that the uncertainty faced by home builders due to their reliance on subcontractors could make costs less predictable, which could increase the cost of new homes. However, as noted previously, because the Joint Employer Rule was not adopted in most jurisdictions, the Department does not expect that the Rule's rescission will significantly increase uncertainty or impose substantial new costs, including in the construction industry. In addition, current court precedent requires consideration of a variety of factors before a company can be held liable as a joint employer; a single factor standing alone, like supervision of a work site, would likely not be enough to establish joint employer liability. Furthermore, as discussed above, many commenters have noted that subcontractors' failure to pay wages owed is a particular problem in the construction industry; rescinding the Joint Employer Rule will further incentivize project managers to select and monitor subcontractors with an emphasis on ensuring compliance with the FLSA. Such a result is beneficial to workers and promotes compliance with the FLSA, helping to ensure a level playing field for responsible employers.

As described in the NPRM, horizontal joint employment may be present where one employer employs an employee for one set of hours in a workweek, and one or more other employers employs the same employee for separate hours in the same workweek. If the two (or more) employers jointly employ the employee, the hours worked by that employee for all of the employers must be aggregated for the workweek and all of the employers are jointly and severally liable. 166

For horizontal joint employment, the Joint Employer Rule adopted the standard in the prior version of 29 CFR 791.2 with non-substantive revisions and set forth that standard in 29 CFR 791.2(e). 167 The Joint Employer Rule's horizontal joint employment standard focused on the degree of the employers' association with respect to the employment of the employee, reflected the Department's historical approach to the issue, and was consistent with the relevant case law. The NPRM stated that the Department was not considering revising its longstanding horizontal joint employment standard but proposed to rescind the entire Joint Employer Rule (including 29 CFR 791.2(e)) because the structure of the Joint Employer Rule made it impractical for the horizontal joint employment provisions to stand on their own. 168

Few commenters addressed horizontal joint employment. The U.S. Chamber of Commerce noted that horizontal joint employment “relationships do not create the same level of uncertainty, or present the same level of exposure, as vertical joint employment relationships, and the provisions in the [Joint Employer Rule] addressing horizontal joint employment relationships have not been questioned.” The Washington Legal Foundation stated that, although the Joint Employer Rule made only non-substantive revisions to the horizontal joint employment standard, “it was still important to issue the Final Rule about horizontal joint employment” because, in its view, the Department “provided regulatory certainty by codifying long-standing practices.” It further stated that if the Department rescinds the Joint Employer Rule, the Department “will inject uncertainty,” and “[i]n these trying times the regulated community needs certainty,” which “[e]xperts say . . . is important to economic growth.” The State AGs commented that the Joint Employer Rule's “provisions relating to the horizontal joint employment test should be rescinded because they are inextricably intertwined with the now-vacated vertical joint employment provisions.” They further commented that “[r]escinding the provisions relating to horizontal joint employment makes practical sense,” “the horizontal joint employment standard has long been established,” and thus “stakeholders can easily refer to DOL's earlier interpretations and relevant case law to understand their obligations.”

Having considered the comments and the issue further, the Department is rescinding the Joint Employer Rule in its entirety ( i.e., all of 29 CFR part 791, including the horizontal joint employment standard in § 791.2(e)). The Joint Employer Rule intertwined the horizontal joint employment provisions with the vertical joint employment provisions in 29 CFR 791.2. For example, § 791.2(f) addressed the consequences of joint employment for both the vertical and horizontal scenarios, and § 791.2(g) provided 11 “illustrative examples” of how the Rule may apply to specific factual situations implicating both vertical and horizontal joint employment. 169 Accordingly, it would be difficult and impractical for § 791.2(e) to remain alone. In addition, § 791.2(e) would lack context alone and potentially be confusing as its references to the “second” joint employment scenario would not make sense without the rest of § 791.2 and the discussion of the “first” joint employment scenario therein.

Although the Department is rescinding the Joint Employer Rule in its entirety, it did not reconsider the substance of its longstanding horizontal joint employment analysis. The focus of a horizontal joint employment analysis will continue to be the degree of association between the potential joint employers, as it was in the Joint Employer Rule and the prior version of part 791. 170 As has been the Department's position for decades, the association will be sufficient to demonstrate joint employment in the following situations, among others: (1) There is an arrangement between the employers to share the employee's services; (2) one employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or (3) the 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. 171

The NPRM stated that, if the Joint Employer Rule is rescinded as proposed, part 791 of title 29 of the Code of Federal Regulations would be removed in its entirety and reserved. 172 The NPRM also noted that the Department was not proposing regulatory guidance to replace the guidance located in part 791. 173 Because this final rule adopts and finalizes the rescission of the Joint Employer Rule, part 791 is removed in its entirety and reserved. As stated in the NPRM, the Department will continue to consider legal and policy issues relating to FLSA joint employment before determining whether alternative regulatory or subregulatory guidance is appropriate. 174

The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., and its attendant regulations, 5 CFR part 1320, require the Department to consider the agency's need for its information collections, their practical utility, as well as the impact of paperwork and other information collection burdens imposed on the public, and how to minimize those burdens. This final rule does not contain a collection of information subject to Office of Management and Budget (OMB) approval under the Paperwork Reduction Act.

Under Executive Order 12866, OMB's Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of the Executive Order and OMB review. 175 Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as a regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more, or adversely affect in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as economically significant); (2) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive order. OIRA has determined that this rescission is economically significant under section 3(f) of Executive Order 12866. Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), OIRA has also designated this rule as a major rule, as defined by 5 U.S.C. 804(2).

Executive Order 13563 directs agencies to, among other things, propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; that it is tailored to impose the least burden on society, consistent with obtaining the regulatory objectives; and that, in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. Executive Order 13563 recognizes that some costs and benefits are difficult to quantify and provides that, when appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. The analysis below outlines the impacts that the Department anticipates may result from this rescission and was prepared pursuant to the above-mentioned Executive orders.

Rescinding the Joint Employer Rule will impose direct costs on businesses that will need to review the rescission. To estimate these regulatory familiarization costs, the Department determined: (1) The number of potentially affected entities, (2) the average hourly wage rate of the employees reviewing the rescission, and (3) the amount of time required to review the rescission. It is uncertain whether these entities would incur regulatory familiarization costs at the firm or the establishment level. For example, in smaller businesses there might be just one specialist reviewing the rescission, while larger businesses might review it at corporate headquarters and determine policy for all establishments owned by the business. To avoid underestimating the costs of this rescission, the Department uses both the number of establishments and the number of firms to estimate a potential range for regulatory familiarization costs. The lower bound of the range is calculated assuming that one specialist per firm will review the rescission, and the upper bound of the range assumes one specialist per establishment.

The most recent data on private sector entities at the time this final rule was drafted are from the 2017 Statistics of U.S. Businesses (SUSB), which reports 5,996,900 private firms and 7,860,674 private establishments with paid employees. 176 Because the Department is unable to determine how many of these businesses have workers with one or more joint employers, this analysis assumes all businesses will undertake review.

The Department believes ten minutes per entity, on average, to be an appropriate review time here. This rulemaking is a rescission and will not set forth any new regulations or guidance regarding joint employment. Additionally, as it believed when it issued the Joint Employer Rule, the Department believes that many entities are not joint employers and thus would not spend any time reviewing the rescission. Therefore, the ten-minute review time represents an average of no time for the majority of entities that are not joint employers, and potentially more than ten minutes for review by some entities that might be joint employers.

The Department's analysis assumes that the rescission would be reviewed by Compensation, Benefits, and Job Analysis Specialists (SOC 13-1141) or employees of similar status and comparable pay. The median hourly wage for these workers was $32.30 per hour in 2020, the most recent year of data available. 177 The Department also assumes that benefits are paid at a rate of 46 percent  178 and overhead costs are paid at a rate of 17 percent of the base wage, resulting in a fully loaded hourly rate of $52.65.

The Department estimates that the lower bound of regulatory familiarization cost range would be $52,728,043 (5,996,900 firms × $52.65 × 0.167 hours), and the upper bound, $69,115,369 (7,860,674 establishments × $52.65 × 0.167 hours). The Department estimates that all regulatory familiarization costs would occur in Year 1.

Additionally, the Department estimated average annualized costs of regulatory familiarization with this rescission over 10 years. Over 10 years, it would have an average annual cost of $7.0 million to $9.2 million, calculated at a 7 percent discount rate ($5.8 million to $7.6 million calculated at a 3 percent discount rate). All costs are in 2020 dollars.

As discussed above, some commenters asserted that there may be other potential costs to the regulated community, such as reduced clarity from the lack of the Rule's regulatory guidance. Because it lacks data on the number of businesses that are in a joint employment relationship or those that changed their policies as a result of the Joint Employer Rule, the Department has not quantified these potential costs, which are expected to be de minimis. Although the rescission removes the regulations at 29 CFR part 791, the Department believes that this will not result in substantial costs or decreased clarity for the regulated community because, as discussed above, most courts apply a vertical joint employment analysis different from the analysis in the Joint Employer Rule and have not adopted the Rule's analysis. The State AGs agree with this assertion in their comment. Texas RioGrande Legal Aid asserts that the Joint Employer Rule would not have created clarity for the agricultural sector, because employers would face conflicting obligations under the different regulatory regimes of FLSA and MSPA.

WPI asserted that using an “expanded” joint employment standard instead of the standard put forth in the Joint Employer Rule would result in a loss of output of $17.2 billion to $33.3 billion annually for the franchise business sector. WPI cites a comment provided by the International Franchise Association to the 2019 Joint Employer NPRM. In this comment, the International Franchise Association discusses a study by Dr. Ron Bird, looking at the effects of the National Labor Relations Board's re-articulation of its joint employer standard in the Browning-Ferris case. The National Labor Relations Board is responsible for enforcing the National Labor Relations Act (NLRA), which differs from the FLSA. The commenters, however, do not provide any data or information connecting this output loss to rescission of the Joint Employer Rule.

In the Joint Employer Rule's regulatory impact analysis, the Department acknowledged that the Rule could limit the ability of workers to collect wages due to them under the FLSA because when there is only one employer liable, there are fewer employers from which to collect those wages and no other options if that sole employer lacks sufficient assets to pay. 179 Because the Joint Employer Rule provided new criteria for determining joint employer status under the FLSA and given the specifics of those criteria, it potentially reduced the number of businesses found to be joint employers from which employees may be able to collect back wages due to them under the Act. This, in turn, potentially reduced the amount of back wages that employees were able to collect when an employer did not comply with the Act and, for example, was or became insolvent.

Like the Joint Employer Rule, this rescission will not change the amount of wages due any employee under the FLSA. However, rescinding the Joint Employer Rule could result in a transfer from employers to employees in the form of back wages owed that employees would thereafter be able to collect. The Department lacks data on the current number of businesses that are in a joint employment relationship, or to estimate the financial capabilities (or lack thereof) of these businesses and therefore is unable to estimate the magnitude of an increase in the number of employers liable as joint employers.

Although the Rule would not have changed the amount of wages due to an employee, the narrower standard for joint employment in the Rule could have incentivized “workplace fissuring.” Research has shown that this type of domestic outsourcing can suppress workers' wages, especially for low-wage occupations. 180 The State AGs asserted, “[f]issured workplaces result in lower wages, greater wage theft, and less job security, especially for immigrants or people of color who make up a disproportionate share of low-wage workers in nonstandard work arrangements.”

In 2019, the Economic Policy Institute (EPI) submitted a comment in response to the Joint Employer NPRM in which they calculated that the Rule would result in transfers from employees to employers of over $1 billion. 181 They again referenced this analysis in their comment on the proposed rescission. EPI explained that these transfers would result from both an increase in workplace “fissuring” as well as from an increase in wage theft by employers. Rescinding this standard could help mitigate any increased workplace fissuring and wage theft that would have resulted. The Department is unable to determine to what extent these transfers occurred while the Joint Employer Rule was in effect, and therefore has not provided a quantitative estimate of transfers from employers to employees because of this rescission. The Department is also unable to estimate the increase in back wages that employees will be able to collect because of this change.

This rescission could also benefit some small businesses, because the Joint Employer Rule's narrowing of the joint employment standard could have made them solely liable and responsible for complying with the FLSA without relying on the resources of a larger business in certain situations.

The Texas Public Policy Foundation commented on the Department's economic analysis, saying that the Department did not make any specific findings of the Rule's effect on workers. The Department still believes that due to lack of data on the number of joint employment relationships, as well as how these relationships would have changed under the Joint Employer Rule, it is not possible to quantify the magnitude of transfers associated with the Rule or with its rescission. Likewise, the commenter does not provide any data or information about the impact of this rescission on workers.

The Department believes that rescinding the Joint Employer Rule will result in benefits to workers and will strengthen wage and hour protections for vulnerable workers. Removing a standard for joint employment that is narrower than the standard applied by courts and WHD's prior standards may enable more workers to collect back wages to which they would already be entitled under the FLSA. This could particularly improve the well-being and economic security of workers in low-wage industries, many of whom are immigrants and people of color, because FLSA violations are more severe and widespread in low-wage labor markets. 182

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 (1996), requires Federal agencies engaged in rulemaking to consider the impact of their proposals on small entities, consider alternatives to minimize that impact, and solicit public comment on their analyses. The RFA requires the assessment of the impact of a regulation on a wide range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Accordingly, the Department examined this rescission to determine whether it would have a significant economic impact on a substantial number of small entities. The most recent data on private sector entities at the time this final rule was drafted are from the 2017 Statistics of U.S. Businesses (SUSB), which reports 5,996,900 private firms and 7,860,674 private establishments with paid employees. 183 Of these, 5,976,761 firms and 6,512,802 establishments have fewer than 500 employees. Because the Department is unable to determine how many of these businesses have workers with one or more joint employers, this analysis assumes all businesses will undertake review.

The per-entity cost for small business employers is the regulatory familiarization cost of $8.79, or the fully loaded mean hourly wage of a Compensation, Benefits, and Job Analysis Specialist ($52.65) multiplied by 1/6 hour (ten minutes). Because this cost is minimal for small business entities, and well below one percent of their gross annual revenues, which is typically at least $100,000 per year for the smallest businesses, the Department certifies that this rescission will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (UMRA)  184 requires agencies to prepare a written statement for rules with a Federal mandate that may result in increased expenditures by state, local, and tribal governments, in the aggregate, or by the private sector, of $165 million ($100 million in 1995 dollars adjusted for inflation) or more in at least one year. 185 This statement must: (1) Identify the authorizing legislation; (2) present the estimated costs and benefits of the rule and, to the extent that such estimates are feasible and relevant, its estimated effects on the national economy; (3) summarize and evaluate state, local, and tribal government input; and (4) identify reasonable alternatives and select, or explain the non-selection, of the least costly, most cost-effective, or least burdensome alternative.

This final rule is issued pursuant to the Fair Labor Standards Act of 1938, 29 U.S.C. 201-219.

For purposes of UMRA, this rescission is not expected to result in increased expenditures by the private sector or by state, local, and tribal governments of $165 million or more in at least one year. As discussed earlier, the Department believes that the rescission will not result in substantial costs for the regulated community because most courts apply a vertical joint employment analysis different from the analysis in the Joint Employer Rule and have not adopted the Rule's analysis. More detailed analysis of impacts appears above.

UMRA requires agencies to estimate the effect of a regulation on the national economy if such estimates are reasonably feasible and the effect is relevant and material. 186 However, OMB guidance on this requirement notes that such macroeconomic effects tend to be measurable in nationwide econometric models only if the economic effect of the regulation reaches 0.25 percent to 0.5 percent of Gross Domestic Product (GDP), or in the range of $52.3 billion to $104.7 billion (using 2020 GDP). 187 A regulation with a smaller aggregate effect is not likely to have a measurable effect in macroeconomic terms, unless it is highly focused on a particular geographic region or economic sector, which is not the case with this rule. Given OMB's guidance, the Department has determined that a full macroeconomic analysis is not likely to show that these costs would have any measurable effect.

The Department has (1) reviewed this rescission in accordance with Executive Order 13132 regarding federalism and (2) determined that it does not have federalism implications. The rescission would not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government.

This rescission would not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

On April 8, 2020 the Coast Guard published a TD in the Federal Register (85 FR 19659) to test the proposed rule and allow mariners to provide comments from June 1, 2020 through September 1, 2020. We received one unrelated comment.

On May 4, 2021, the Coast Guard published a NPRM in the Federal Register (86 FR 23639). There we stated why we issued the NPRM, and invited comments on proposed regulatory action. During the comment period that ended on June 3, 2021, we received zero (0) comments.

The Coast Guard is issuing this rule under authority 33 U.S.C. 499.

The Amtrak Railroad Bridge, mile 3.77, over the South Branch of the Chicago River provides a vertical clearance of 10 feet in the down position and 65 feet in the open position above LWD and a horizontal clearance of 156 feet. The bridge crosses the river on a slight skew on an “S” curve in the river requiring longer vessels to use most of the horizontal clearance for maneuvering. The South Branch of the Chicago River is part of a network of waterways that allow vessels to travel from Chicago, IL to New Orleans, LA. Cook County described the Chicago River as the 5th largest port in the United States, hosting commercial vessels over 300 tons, recreational power and sailing vessels, several passenger vessels, water taxies, paddle boats and various paddle craft. Most vessels can pass under all of the bridges in the Chicago metropolitan area without an opening, with the exception of the Amtrak Bridge. During an average weekday, 150,000 commuters travel over the Amtrak Bridge.

In accordance with general bridge regulations a drawbridge must open promptly and fully when signaled to open. Lifting the bridge to 65 feet for every vessel when most vessels only need an additional 10 feet of clearance increases the delay experienced by all modes of transportation.

The Amtrak Bridge has been operating remotely for several years without any concerns for the mariners.

We received one comment to the TD that was unrelated to the bridge or proposed regulatory action. We did not receive any comments to the NPRM, and do not intend to change anything from the published NPRM.

The Coast Guard is including in the regulations that the AMTRAK Bridge is authorized to operate remotely.

The Coast Guard is authorizing the bridge to open to an intermediate position that will provide a vertical clearance of 34 feet above LWD. A yellow light at the center of the bridge, visible to vessels approaching the bridge from both upriver and downriver sides will verify the bridge has met the intermediate height. At any time a vessel with greater air draft can radio the drawtender and request a full opening. This rule is expected to increase bridge availability to all users by 50%.

We developed this rule after considering numerous statutes and Executive Orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive Orders, and we discuss First Amendment rights of protesters.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, it has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the ability that vessels can still transit the bridge without changing the bridge schedule and it keeps the maximum advertised clearance available for vessels as needed.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rule. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the bridge may be small entities, for the reasons stated in section V. A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01, Rev.1, associated implementing instructions, and Environmental Planning Policy COMDTINST 5090.1 (series) which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f). The Coast Guard has determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule promulgates the operating regulations or procedures for drawbridges and is categorically excluded from further review, under paragraph L49, of Chapter 3, Table3-1 of the U.S. Coast Guard Environmental Planning Implementation Procedures.

Neither a Record of Environmental Consideration nor a Memorandum for the Record are required for this rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows:

Throughout this document, “we,” “us” and “our” refer to the EPA.

On February 25, 2021 (86 FR 11480), the EPA proposed a limited approval and limited disapproval of the following rule that was submitted for incorporation into the California SIP.

We proposed a limited approval because we determined that this rule improves the SIP and is largely consistent with the relevant CAA requirements. We simultaneously proposed a limited disapproval because the following rule provision conflicts with section 110 and part D of the Act. The provision at section 110.6 of the rule exempts solvent degreasing operations that are subject to National Emission Standards for Hazardous Air Pollutants (NESHAP) requirements at 40 CFR part 63 Subpart T regulating halogenated solvent cleaning.

CAA Section 182(b)(2) (“Reasonably available control technology”) states: “The State shall submit a revision to the applicable implementation plan to include provisions to require the implementation of reasonably available control technology . . . .” While the YSAQMD has been delegated the authority to enforce the requirements in 40 CFR 63 Subpart T, this type of delegation of authority to a district or state does not place those requirements or its emission limitations into the SIP. Thus, this rule fails to implement RACT for halogenated solvent cleaning in an enforceable SIP regulation. Our proposed action contains more information on the basis for this rulemaking and on our evaluation of the submittal.

The EPA's proposed action provided a 30-day public comment period. During this period, we received one comment that was supportive of the proposed action.

No comments were submitted that change our assessment of the rule as described in our proposed action. Therefore, as authorized in sections 110(k)(3) and 301(a) of the Act, the EPA is finalizing a limited approval of the submitted rule. This action incorporates the submitted rule into the California SIP, including those provisions identified as deficient. As authorized under section 110(k)(3) and 301(a), the EPA is simultaneously finalizing a limited disapproval of the rule. As a result, the EPA must promulgate a federal implementation plan under section 110(c) unless we approve subsequent SIP revisions that correct the rule deficiencies within 24 months. In addition, the offset sanction in CAA section 179(b)(2) will be imposed 18 months after the effective date of this action, and the highway funding sanction in CAA section 179(b)(1) six months after the offset sanction is imposed. A sanction will not be imposed if the EPA determines that a subsequent SIP submission corrects the identified deficiencies before the applicable deadline.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the YSAQMD rules described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents available through www.regulations.gov and at the EPA Region IX Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Additional information about these statutes and Executive orders can be found at http://www.epa.gov/laws-regulations/laws-and-executive-orders.

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.

This action does not impose an information collection burden under the PRA because this action does not impose additional requirements beyond those imposed by state law.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities beyond those imposed by state law.

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, will result from this action.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the National Government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have tribal implications, as specified in Executive Order 13175, because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and will not impose substantial direct costs on tribal governments or preempt tribal law. Thus, Executive Order 13175 does not apply to this action.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive order. This action is not subject to Executive Order 13045 because it does not impose additional requirements beyond those imposed by state law.

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

Section 12(d) of the NTTAA directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. The EPA believes that this action is not subject to the requirements of section 12(d) of the NTTAA because application of those requirements would be inconsistent with the CAA.

The EPA lacks the discretionary authority to address environmental justice in this rulemaking.

This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 28, 2021. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

For reasons set forth in the preamble, EPA amends Part 52, Chapter I, Title 40 of the Code of Federal Regulations as follows:

The snapper-grouper fishery of the South Atlantic includes blueline tilefish and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The South Atlantic Fishery Management Council and NMFS prepared the FMP, and the FMP is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622. All weights in this temporary rule are given in round weight.

As specified at 50 CFR 622.193(z)(1)(i), the commercial sector ACL for blueline tilefish is 117,148 lb (53,137 kg). The commercial AM for blueline tilefish requires NMFS to close the commercial sector when the its ACL is reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register (50 CFR 622.193(z)(1)(i)). NMFS has projected that for the 2021 fishing year, the commercial sector ACL for South Atlantic blueline tilefish will be reached by August 1, 2021. Accordingly, the commercial sector for South Atlantic blueline tilefish is closed effective at 12:01 a.m., eastern time, on August 1, 2021, until 12:01 a.m., eastern time, on January 1, 2022.

The operator of a vessel with a valid Federal commercial vessel permit for South Atlantic snapper-grouper having blueline tilefish on board must have landed and bartered, traded, or sold such blueline tilefish prior to August 1, 2021. During the commercial sector closure, all sale or purchase of blueline tilefish is prohibited. The harvest or possession of blueline tilefish in or from the South Atlantic EEZ is limited to the recreational bag and possession limits specified in 50 CFR 622.187(b)(2) and (c)(1), respectively, while the recreational sector for blueline tilefish is open. These bag and possession limits apply in the South Atlantic on board a vessel with a valid Federal commercial or charter vessel/headboat permit for South Atlantic snapper-grouper, and apply to the harvest of blueline tilefish in both state and Federal waters.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 622.193(z)(1)(i)), which was issued pursuant to section 304(b) of the Magnuson-Stevens Act, and is exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment is unnecessary and contrary to the public interest. Such procedures are unnecessary because the regulations associated with the closure of the blueline tilefish commercial sector at 50 CFR 622.193(z)(1)(i) have already been subject to notice and public comment, and all that remains is to notify the public of the closure. Prior notice and opportunity for public comment are contrary to the public interest because there is a need to immediately implement this action to protect blueline tilefish, since the capacity of the fishing fleet allows for rapid harvest of the commercial sector ACL. Prior notice and opportunity for public comment would require time and would potentially result in a harvest well in excess of the established commercial sector ACL.

For the aforementioned reasons, the Acting Assistant Administrator also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).