On June 7, 2017, the Department of Labor (DOL) issued the following press release that withdrew previously issued “informal guidance” regarding independent contractors and joint employment:
“U.S. Secretary of Labor Alexander Acosta today announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors. Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. The department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.”
The 2015 guidance on independent contractors had reflected the DOL’s focus on what it had viewed as the frequent misclassification of employees as independent contractors. In an effort to limit it, the DOL had utilized a very broad definition of “employ” under the Fair Labor Standards Act (FLSA), i.e., “to suffer or permit to work, that it claimed meant that “most workers are employees under the FLSA.”
The DOL’s 2016 guidance on joint employment similarly had presented a very wide-ranging interpretation of what “joint employment” was, based on the NLRB’s Browning-Ferris decision. In that decision, the Board had found that two or more entities are joint employers of a single workforce if they both: (i) are “employers” under common law; and (ii) determine those matters governing essential terms and conditions of employment. In making the decision if an employer had sufficient control over employees to be considered a joint employer, the Board had said it would consider, among other things, whether or not an employer exercises control indirectly through an intermediary, or if it has retained the authority to do it.
Despite this positive development, employers must continue to proceed in these areas with caution.
For one thing, over time, what the DOL can take away, it can also put back in place. On a practical level, employers should note the DOL’s view that this change does not alter employers’ legal responsibilities as they reconsider their practices in light of the current legal environment.
Even if the Trump DOL may be unlikely to be aggressive in investigating and pursuing misclassification and joint employment issues, prudent employers should seek legal counsel before implementing significant changes in their practices in order to understand all of the risks and benefits before proceeding.