Yesterday the U.S. Secretary of Labor Alexander Acosta announced the Department of Labor’s withdrawal of guidance on independent contractors and joint employer liability issued in 2015 and 2016 by the Obama administration DOL. Generally, the guidance made more people employees rather than independent contractors. In particular, this guidance sought to (1) define more rigidly the situations in which a worker was found to be an employee under an “economic realities test” (even when an independent contractor relationship was intended), and (2) expand the joint employer doctrine taking into account “whether, as a matter of economic reality, the employee [was] economically dependent on the potential joint employer.”
The DOL’s roll back of Obama-era guidance signals an important shift in favor of employers, but no binding laws have changed. Employers should remember that the same statutes, regulations, and case law are still in force and the analysis applied to these issues remains the same, at least for the time being. In fact, the proper legal “test” for joint employer liability is currently on appeal in the D.C. Circuit in the Browning-Ferris case, with a decision expected later this year. For a more detailed look at the law on independent contractors and joint employers, see our previous blog posts on independent contractors and joint employment. Be sure to keep an eye on how the DOL’s action affects these issues going forward.