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DOL Withdraws Joint Employer Guidance Letters

Posted in: Capital Watch

On June 7, 2017, U.S. Secretary of Labor Alexander Acosta announced the withdrawal of the U.S. Department of Labor’s (DOL) 2015 and 2016 informal guidance on joint employment and independent contractors. The Obama-era guidance was released following the National Labor Relations Board’s (NLRB) ruling in the Browning-Ferris case, which broadened what it means to be a joint employer standard to an “indirect” and “potential” control standard. The guidance took an expansive interpretation of employment and threatened the traditional relationship between contractors and their partners.

The first guidance letter in 2015 – from DOL’s Wage & Hour Division (WHD) – came in the form of an Administrator's Interpretation (AI) memo that addressed the misclassification of employees as independent contractors. The DOL's position was that most workers qualify as employees under the Fair Labor Standards Act (FLSA) and its broad definition of "employ."

The AI that was then issued in 2016 by the WHD established new standards for determining joint employment under the federal FLSA and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The intent was to hold companies jointly accountable for FLSA and MSPA violations of their subcontractors, staffing agencies, etc., through use of an “economic realities” analysis. The withdrawals are effective as of June 7, 2017, meaning that the AIs can no longer be used to support enforcement actions, but the broader interpretation established by the NLRB remains in effect.