Department of Labor Shifts Course on Joint Employment and Independent Contractor Classification
Labor & Employment Alert 06/12/17 Christopher L. Nickels, Gary R. Clark, Fred Gants, Otto W. Immel
On June 7, 2017, Secretary of Labor Alexander Acosta announced the withdrawal of the Department of Labor’s (DOL) 2015 and 2016 informal guidance memos on joint employment and independent contractors. Those memos had clarified the Obama DOL’s view toward broad, employee-friendly definitions of joint employment and independent contractor misclassification under the Fair Labor Standards Act (FLSA), and were largely viewed as pushing these concepts far in favor of employees. The withdrawal signals a shift by the current DOL toward less vigorous enforcement on these issues, and is consistent with President Trump’s position of reversing federal rules that, in the President’s view, unnecessarily restrict employers and business owners.
The independent contractor memo, issued in 2015, generally posited that most workers are employees under the broad definition of “employment” contained in the FLSA. The joint employment memo, issued in 2016, sought to expand potential liability under the FLSA by making it possible for a putative joint employer, who does not necessarily exercise direct control over another employer’s workers, to be deemed liable for violations of wage and hour laws. We discussed the impact of these DOL memos when they were issued.
Notably, the withdrawal of the DOL memos does not change the law in any way. DOL memos are not binding on courts, which have interpreted joint employment concepts and independent contractor issues for a long time—this court-established body of law remains. Withdrawing the memos does, however, take away arguments that workers could have used to argue they should be covered under the FLSA, even when they are not on a putative employer’s payroll.
The DOL action also does not impact the ongoing National Labor Relations Board’s landmark and controversial Browning-Ferris decision, which said that under the National Labor Relations Act, a company and its contractor can be seen as a single joint employer even if the company has not exerted overt control over workers’ terms and conditions. (See our summary of the Browning-Ferris decision here. That ruling is currently on appeal at the D.C. Circuit, which heard oral arguments earlier this year.
Quarles & Brady will continue to report on these issues. For more information or assistance complying with the FLSA or other wage and hour law requirements, please contact Christopher L. Nickels at (414) 277-5519/[email protected], Gary R. Clark at (312) 715-5040/[email protected], Fred Gants at (608) 283-2618/[email protected], Otto W. Immel at (239) 659-5041/[email protected] or your Quarles & Brady attorney.