DOL Withdraws Worker Classification Guidance

On June 7, 2017, the US Department of Labor (DOL) withdrew its 2015 and 2016 informal guidance related to classification of workers as independent contractors (where a worker is not considered an employee of the business for which the individual is providing work) or joint employees (where a worker is considered an employee of multiple employers).  The previous guidance stated that the DOL would find an entity to be a joint employer if it exerted even “indirect control” over a worker, while joint employment previously required more direct control of the worker.  The guidance specifically highlighted staffing agencies and sub-contractors as potentially creating joint employment.  It additionally stated that “most workers are employees under the FLSA” and independent contractor status was likely to be found only when the worker “is really in business for him or herself,” de-emphasizing control of the worker’s work as a deciding factor.

The DOL’s statement points out: “Removal 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.”  However, even if the legal standards remain unchanged, the withdrawal of these opinions likely demonstrates a shift in the DOL’s interpretation and enforcement away from the prior administration’s expansive approach toward employment status of workers.

Employers should continue to be ensure that employees are not improperly classified as independent contractors and that joint employment relationships are not inadvertently created.  However, employers need not worry that tangential, indirect acts of control of another’s employees could result in a joint employment finding, nor should employers hesitate to classify workers as independent contractors in appropriate situations.


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