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Department of Labor Signals Move to Limit Definition of “Employment”

On June 7, 2017, U.S. Secretary of Labor Alexander Acosta announced the immediate withdrawal of the U.S. Department of Labor’s (DOL’s) 2015 and 2016 Administrative Interpretations regarding joint employment and independent contractors. While this withdrawal signals the current administration’s attempt to limit the expansive definition of “employment,” the DOL made clear that it does not relieve companies of their legal obligations under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act.

Many businesses had argued these obligations were unduly burdensome on employers. For the past several years, the Wage and Hour Division (WHD) has worked with the IRS and numerous states to combat employee misclassification and to ensure that workers receive all the wages, benefits and protections to which they are entitled. In Fiscal Year 2015, for example, WHD investigations resulted in some $74 million in back wages for more than 102,000 workers, many of which were concentrated in traditionally low-wage industries such as janitorial, temporary help, food service, day care and hospitality. Withdrawal of the Administrative Interpretations may be the first step to rein in these enforcement efforts.

Specifically, the DOL has withdrawn guidance regarding:

  • The Presumption That Most Workers Are Employees: The withdrawn guidance on independent contractors stated that “most workers are employees” under the FLSA. United States Supreme Court precedent makes clear that there is no single rule or test for determining whether an individual is an employee or an independent contractor for purposes of the FLSA. Thus, even now, the inquiry into independent contractor status remains complex and fact-intensive.

  • The Expansion of the “Joint Employer” Definition: The withdrawn guidance on joint employment distinguished between “horizontal” joint employment and “vertical” joint employment scenarios. Under this guidance, the joint employment inquiry focused on the “economic realities” of the relationship between the employee and the potential joint employer. Its withdrawal signals a shift back to applying joint employer status only when a business has direct control over another business’s workplace.

More is expected from the Trump Administration and the courts on the ever-changing law surrounding independent contractors and joint employment.

© 2017 Wilson Elser

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About this Author

Angela Duerden, Employment Attorney, Corporations, Small, Wilson Elser Law Firm
Of Counsel

Angela Duerden has spent nearly 15 years representing a variety of employers, from small family-owned businesses to large international corporations. Her practice includes providing advice and counsel to her clients on personnel matters as well as the defense of employment-related litigation. Angela actively works with clients in Florida and California and is highly sought-after speaker on various workplace issues, including compliance with equal employment opportunity laws, disability management issues and diversity and inclusion.

407.203.7569
Elisabeth Shu, Wilson Elser Law Firm, Labor and Employment Litigation Attorney
Of Counsel

Lisa Shu is a litigator with a proven track record of successfully defending her clients against claims arising out of employment or other business relationships. Her practice centers mainly on resolving disputes related to discrimination and retaliation claims before various federal and state agencies, employment agreements, covenants not to compete, and wrongful termination.

703-852-7793