Despite New DOL, Independent Contractor Misclassification and Joint Employment Remain Risky

What effect of withdrawal of DOL memos

In June 2017, the DOL withdrew its Obama-era 2015 and 2016 informal guidance on joint employment and independent contractors. The memos covered federal wage and hour law (FLSA). Eight months later, what effect has that decision made?

Essentially none.

Remember, the 2015 and 2016 memos did not change the law on independent contractor misclassification or joint employment. Rather, the memos were an attempt by the Wage & Hour Administrator, David Weil, to summarize existing law – but with a pro-employee leaning. The memos selectively interpreted court decisions that supported Weil’s view of the world, i.e., that most workers are employees. When Weil left, the DOL said goodbye to his interpretations as well.

But …

  • Withdrawal of the memos did not change the statute. The FLSA is the same as before.
  • Withdrawal of the memos did not change the Economic Realities Test.
  • Withdrawal of the memos did not change the regulations. The Code of Federal Regulations (CFR) is the same as before.
  • Withdrawal of the memos did not affect court decisions interpreting the FLSA. In fact, at least one Court of Appeals is making it easier to find joint employment under federal wage and hour law.

No new memo has been released to replace the old one.

The Trump DOL and the new Wage & Hour Administrator (not yet appointed) is likely to interpret the FLSA in a way that favors the use of independent contractor relationships and reduces the likelihood of finding joint employment. The DOL might reduce its audits or might provide guidance intended to help businesses comply. But whatever new guidance is issued, that won’t change the statutes, the regulations, or the court decisions.

The NLRB definition of joint employment — for labor law/unionization purposes — is in a state of flux and just got worse for businesses. See blog post here. For businesses using non-employee workers, independent contractor misclassification and joint employment remain significant issues with potentially significant liabilities.

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For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Los Angeles on Feb. 27, or Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, tlebowitz@bakerlaw.com, and list my name in your RSVP so I can be sure to look for you.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.