The unwinding continues. The U.S. Department of Labor (DOL) recently announced the withdrawal of the Obama administration’s previously issued informal guidance on independent contractors and joint employers.
In a very brief statement, the DOL announced that it was withdrawing a 2016 interpretation of the Fair Labor Standards Act (FLSA) which expanded the joint employer standard from one requiring a business to have direct control over an employee to a more broad and ambiguous standard of indirect control.
The withdrawal of this guidance, however, does not affect the National Labor Relations Board’s own separate (and legally binding) expansion of the joint employer standard, which is currently under court review.
The DOL’s announcement also ended the DOL’s Obama-era presumption that “most workers are employees under the FLSA’s broad definitions” – a presumption that most employers believed significantly eroded the independent contractor classification.
While this position may signal a more employer-friendly DOL, it should be noted that removal of these administrative interpretations does not change the legal responsibilities of employers under the FLSA as interpreted by the DOL’s long standing regulations and case law. This new pendulum swing also does nothing to resolve the various state law interpretations of independent contractor classification and joint employer liability. Going forward, employers would be wise to continue taking precautions and seeking legal counsel when dealing with these issues.