The US Department of Labor withdrew its 2015 and 2016 informal guidance on joint employment and independent contractors, Secretary of Labor Alexander Acosta announced last week.
“Although the former administrator’s guidance was not binding, it contained a presumption that under the [Fair Labor Standards Act] ‘most workers are employees,’” said Fiona Coombe, director of legal and regulatory research at Staffing Industry Analysts. “The withdrawal of the guidance was anticipated as it stressed the broad interpretation of the Fair Labor Standards Act’s economic realities test and supported the DOL’s previous efforts to crack down on misclassification and noncompliance with wage and hour legislation. This suggests a more employer-friendly stance than the previous administration’s.”
The department warned that removal of the interpretation does not change employers’ legal responsibilities under the FLSA. According to the announcement, “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 new guidance on joint employment had been issued in January 2016 by the Department of Labor’s Wage and Hour Division.
InsideSources.com reported business groups, particularly franchise firms, had been critical of the guidance.
“In a narrow sense, the rollback of these guidance pieces should be encouraging to employers directly involved in work with independent contractors, leasing agencies, temp workers, other potentially joint employment relationships, and more,” said John Alan Doran, a partner at the law firm Sherman & Howard, who represents employers. “The previous administration made clear that it intended to expansively interpret the definition of employer, while the rollback suggests a more realistic understanding of modern workplace relationships.”