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US Secretary of Labor Withdraws Joint Employer, Independent Contractor Informal Guidance

06.06.2017

On June 7, 2017, U.S. Secretary of Labor Alexander Acosta announced the withdrawal of the DOL’s 2015 guidance on employee / independent contractor classification under the Fair Labor Standards Act (“FLSA”) (Administrator’s Interpretation No. 2015-1) and its 2016 guidance on joint employment under the Migrant and Seasonal Agricultural Worker Protection Act (“MSWPA”) (Administrator’s Interpretation No. 2016-01). Both were “informal” guidance documents, meaning that they did not substantively change the law but rather signaled the DOL’s interpretation of certain provisions of the law and its likely high-priority enforcement targets. As we reported in our July 2015 Newsflash, the misclassification guidance defined the concept of employment so broadly that “most” workers were employees under the FLSA. Similarly, in the 2016 MSWPA guidance, the DOL indicated its expansive view of the concept of joint employment. Both guidance documents were an abrupt shift away from traditional interpretations and enforcement priorities of the DOL. As a finding of joint employment or employee misclassification can subject an employer to significant penalties, this withdrawal will likely be welcomed by many employers and business advocates.

However, it is important to note that the withdrawal did nothing to change “the legal responsibilities of employers under the [FLSA] and [MSWPA] as reflected in the [DOL’s] long-standing regulations and case law.” Also note that the withdrawal does not affect aggressive stance the National Labor Relations Board (the government agency responsible for enforcing the National Labor Relations Act) has taken against joint employment which, although challenged in several courts, has yet to be definitively resolved.

Koley Jessen will issue updates on this topic as more information becomes available.

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