DOL Withdraws Guidance on Joint Employment and Independent Contractors

Author: Michael Cardman, Brightmine Legal Editor

June 14, 2017

The US Department of Labor (DOL) has withdrawn two administrator interpretations issued during the Obama administration, which had taken employee-friendly stances regarding joint employment and independent contractors.

The interpretations had repackaged existing case law and regulations, and were not inherently entitled to any deference from the courts. As the DOL observed in a news release, "Removal 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."

"Rescinding the guidance indicates that the Trump administration will be less likely to take positions that adversely affect employers," said Stacey L. Smiricky, a partner with Faegre Baker Daniels LLP in Chicago. "However, it could have little impact, as it does not alter existing case law and regulations. The hope would be that focus on joint employer and independent contractor issues would return to who had actual control over the individual, not who "may" exercise control."

The independent contractor administrator interpretation, issued in 2015, took an "economic dependence" approach to determining whether a worker is an employee or an independent contractor. Some took it as a sign that the DOL was creating a presumption that workers are employees unless proven otherwise.

The joint employment administrator interpretation, issued in 2016, took a similarly broad view of the employer-employee relationship. It stated that the use of third-party management companies, independent contractors, staffing agencies or labor providers would often constitute joint employment that makes both parties liable for any minimum wage and overtime violations.