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Retreat: Secretary Of Labor Withdraws Expansive Informal Guidance On Joint Employment And Independent Contractors

With little fanfare or explanation, US Secretary of Labor Alexander Acosta announced on June 7, 2017 the withdrawal of the US Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors. 

According to the press release, “[r]emoval 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 two controversial interpretations made it clear that the DOL was going to take aggressive and expansive positions on joint employment and independent contractor issues. In the joint employment interpretation, the Administrator of the Wage & Hour Division indicated that the WHD “may consider joint employment to achieve statutory coverage, financial recovery, and future compliance, and to hold all responsible parties accountable for their legal obligations.” The interpretation further stated that “[t]he concept of joint employment, like employment generally, should be defined expansively under the FLSA and MSPA.”

In the independent contractor interpretation, the WHD Administrator stated that “when employers improperly classify employees as independent contractors, the employees may not receive important workplace protections such as minimum wage, overtime compensation, unemployment insurance, and worker’s compensation.” The WHD went on to explain that because of the FLSA’s broad definition of employ, there is essentially a presumption that one who works for another is an employee and not an independent contractor.

Although there is a risk of reading too much into the withdrawal of these interpretations, they certainly signal that in applying the joint employment and independent contractor tests going forward, the DOL will take a more balanced approach and perhaps be more open to employer positions on these issues.
 
Arent Fox’s Labor & Employment group will continue to monitor developments in this area. If you have any questions, please contact Michael Stevens or the Arent Fox professional who regularly handles your matters.