As we all expected, President Trump has made his mark on numerous federal policies. On June 7, 2017, the U.S. Department of Labor (“DOL”), now under the leadership of Secretary Alexander Acosta, announced that it had withdrawn two of the past administration’s interpretive bulletins, 2015-1 and 2016-1. Both bulletins had been issued by President Obama’s DOL as guidance, rather than as federal rules, but set the tone in the DOL’s approach to its investigations and enforcement actions.
In the first bulletin, Interpretive Bulletin 2015-1, President Obama’s DOL took a strong stance against businesses misclassifying employees as independent contractors. For employees, unlike independent contractors, businesses are obligated to pay payroll taxes and, except for exempt employees, overtime pay. Employees, unlike independent contractors, may be eligible to unionize. If the worker is economically dependent on the business, the law requires that he or she should be classified as an employee. While acknowledging that there may be circumstances where a worker is legitimately treated as an independent contractor, the past DOL opined in Interpretive Bulletin 2015-1 that such circumstances were rare and set a high bar for businesses to show that a worker is not economically dependent on the business.
In Interpretative Bulletin 2016-1, the Obama administration’s DOL gave a broad interpretation of the Fair Labor Standards Act’s (“FLSA”) joint employer doctrine. Under the FLSA, two or more businesses can be considered joint employers of an employee and jointly and severally liable for the employees’ unpaid overtime wages, even though the employee is on only one employer’s payroll. In Interpretive Bulletin 2016-1, President Obama’s DOL expanded upon the concept of joint employment, looking to broaden the universe of businesses that could be held liable as joint employers under the FLSA. This approach echoed the National Labor Relations Board’s decision in Browning-Ferris, which found that a business can be liable as a joint employer for its contractor, even if the business did not exert control over the contractor’s employees. (The Browning-Ferris decision is on appeal to the D.C. Circuit Court.) The DOL’s approach in Interpretive Bulletin 2016-1 also posed a risk that joint employers could be targets of unionization campaigns.
In withdrawing both interpretive bulletins, the DOL stressed that it was not changing the law. Employers still need to be careful in deciding whether a worker is properly classified as an independent contractor and to avoid liability as a joint employer for other business’s obligations to employees. The DOL’s move, however, signals a more business-friendly approach to the application of existing law. Whereas the Obama administration was inclined to expand workers’ rights to overtime pay and to unionize, the Trump administration has staked the opposite position.