The Department of Labor (DOL) announced Wednesday the withdrawal of the Obama administration’s (informal) guidelines on employer determination of joint employer and independent contractor classifications. The classification guidelines are widely known as the “joint employer” doctrine, which set conditions on business liability for employment and civil rights law violations.
The joint employer doctrine was created to help courts and businesses determine whether a business effectively controlled the workplace policies of another company. The doctrine was especially important to determine the employment relationship when a company sub-contracts employees to another business. The controlling aspects of employment could be hiring procedure, wages, or scheduling.
The concise statement issued by the DOL on Wednesday morning stated that “U.S. Secretary of Labor Alexander Acosta today announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors.” The statement, importantly, added that the “[r]emoval 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.”
Until 2015, the DOL interpreted the joint employer doctrine to apply only to companies with “direct control” over the other business’ workplace. In 2015, the DOL changed its interpretation to allow a business to be a joint employer if it exercised “indirect control” over the other business’ workplace. Just as it sounds, it is a more ambiguous interpretation. This was heard by franchise companies as a threat to allow liability at workplaces that wasn’t directly overseen or controlled.
The rescission of the DOL’s guidance on “indirect control” and independent contractors came with the understanding that the DOL considered most workers to be employees under the Fair Labor Standards Act and that it would broadly define the employee/employer relationship when investigating a company’s practices.
The standards set by the Obama administration’s guidelines can still be applied through the National Labor Relations Board, the government’s main labor law enforcement agency. The NLRB was the first to adopt the standard and has not rescinded it as of yet. It may be important to mention that President Trump has the ability to pick two nominees for the five-member NLRB, which could affect their interpretation of doctrine.
We’ll keep you posted on this one.
