The InternationalFranchise Association (IFA) praised the new rule as a "return to asimple, clear, and thoughtful joint-employer standard."

The U.S. Labor Department under President Trump is changingcourse from the Obama administration and revising guidelines to determine joint-employerstatus under the Fair Labor Standards Act – "in order to promotecertainty for employers and employees, reduce litigation, promotegreater uniformity among court decisions and encourage innovationin the economy."

The nonbinding rule, which takes effect March 15, is intended togive more clarity when an entity can be considered a joint-employerthat could be sued for labor violations including requirements onminimum wage and overtime pay. The Labor Department's joint-employer status guidelines under Obamawere much more expansive, making it easier for workers to sue morethan one entity for labor violations, like for example, both theMcDonald's Corp. and separately owned franchises that ownMcDonald's restaurants.

Related: Federal appeals court weighs in on joint-employerrule

The revised guidelines to determine joint-employer status centeraround a four-factor balancing test derived from the 1983 NinthCircuit decision, Bonnette v. California Health & WelfareAgency, to assess whether the potential joint-employer hires orfires the employee; supervises and controls the employee's workschedule or conditions of employment to a substantial degree;determines the employee's rate and method of payment; and maintainsthe employee's employment records.

An entity does not have to meet all of those requirements to beconsidered a joint-employer. Moreover, additional factors may beconsidered, but only if they are indicative of whether thepotential joint-employer exercises significant control over theterms and conditions of the employee's work.

Examples of such factors include whether the employee is in aspecialty job or a job that otherwise requires special skill,initiative, judgment or foresight; whether the employee has theopportunity for profit or loss based on his or her managerialskill; whether the employee invests in equipment or materialsrequired for work or the employment of helpers; and the number ofcontractual relationships, other than with the employer, that thepotential joint-employer has entered into to receive similarservices.

The revised guidelines would benefit McDonald's Corp., as wellas other companies like Amazon and Comcast that have faced privatelawsuits arguing the corporations are jointly responsible, alongwith third-party contractors, for workers' unpaid minimum wages andovertime, according to Bloomberg Law.

"By describing a simpler and more limited legal view than theObama administration advanced, the Labor Department may allowemployers to exert more control and influence over independentcontractors without the risk of being tagged in federal court as ajoint-employer, which would put them on the hook for shortingworkers' paychecks," Bloomberg Law writes.

Indeed, Labor Secretary Eugene Scalia and White House Chief ofStaff Mick Mulvaney write in the Wall Street Journal that the new rule "alsogives companies in traditional contracting and franchisingrelationships confidence that they can demand certain basicstandards from suppliers or franchisees — like effectiveanti-harassment policies and compliance with employment laws —without themselves being deemed the employer of the other company'sworkers. That will help companies promote fair working conditionswithout facing unwarranted regulatory costs."

The International Franchise Association (IFA) praised the newrule as a "return to a simple, clear, and thoughtful joint-employerstandard," according to the Insurance Journal.

"IFA has argued that the Obama standard increased lawsuitsagainst employers, cost jobs and sapped the American economy of$33.3 billion per year."

Worker groups paint a different picture: Rebecca Dixon,executive director of the National Employment Law Project, told theInsurance Journal that the new rule "makes it easier forcorporations to cheat their workers and look the other way whenworkplace violations occur." The liberal Economic Policy Institutehas said workers could lose $1.3 billion in wages annually underthe new rule, according to the publication.

The National Labor Relations Board is close to revising its ruleon joint-employer status, which would be binding in courts, theInsurance Journal writes.

Read more:

• 3 FAQs about the NLRB's 'joint employer'rulemaking
• White House rolls back Obama-era workplace safetyreporting
• 10 regulatory issues employers shouldwatch