In the past week, the U.S. Department of Labor (“DOL”) under new Labor Secretary Alex Acosta has moved to dismantle a series of the Obama Administration’s rules and guidance regarding employment regulation.
First, on June 7, the DOL withdrew two guidance letters issued by the Obama Administration discussing the misclassification of workers as independent contractors and joint employment. The DOL announced that the withdrawals do not change employers’ legal responsibilities under the Fair Labor Standards Act or the Migrant and Seasonal Agricultural Worker Protection Act.
The independent contractor guidance was issued in July 2015 and opined that most workers are employees, rather than independent contractors. The guidance deemphasized the degree to which a business controls an individual’s work, focusing instead on a multi-factor test aimed at determining whether the worker is economically dependent on the employer or in business for him or herself. The result of the guidance was a narrower window to correctly classify workers as independent contractors and a test without bright-lines to guide employers.
The DOL’s January 2016 administrator’s interpretation regarding joint employment followed the National Labor Relations Board’s decision in Browning-Ferris that said a company and its contractor could be joint employers if the company had indirect or a reserved right to control the contractor, even if such right was not exercised. This decision departed from the previous standard that required a joint employer to have exerted direct and immediate control over hiring, firing, discipline, supervision, and direction.
Now, both interpretations are off the books.