US Department of Labor Withdraws Obama-Era Interpretation Letters On Key Wage And Hour Issues
On June 7, 2017, the US Department of Labor (DOL) withdrew its 2015 Administrator’s Interpretation on “independent contractor” status under the Fair Labor Standards Act (FLSA) and its 2016 Administrator’s Interpretation for determining “joint employment” under the FLSA. The two guidance memos specifically were intended to increase liability for employers under the Fair Labor Standards Act (“FLSA”), the federal statute that governs payment of minimum wages and overtime compensation. The guidance on joint employment was particularly controversial for employers, making it possible for the DOL to assess joint and several liability on even loosely related entities that did not necessarily have any control over the worker(s) in question.
Newly appointed Department of Labor Secretary Alexander Acosta acted to unwind these memoranda. In so doing, he reminded employers that their withdrawal did not “change the legal responsibilities of employers under the FLSA” as “reflected in the Department’s long standing regulations and case law.” Nevertheless, the action clearly signals a significant change in the enforcement position of the DOL concerning who qualifies as a joint employer or independent contractor under the FLSA. Although the DOL’s enforcement position is not the last word on the subject and courts will have the final say, the rescission of these guidance memoranda should provide some assurance to employers that under the present administration, there is less risk of a DOL enforcement action. Although the withdrawal of these memos does not formally change the law, it does signal the direction of the current DOL. While perhaps a positive development for employers, employers should still take caution with respect to all forms of wage and hour compliance, particularly in light of the availability of private class and collective action remedies.