On June 7, Secretary of Labor Alexander Acosta announced the withdrawal of two Administrator Interpretations (“AIs”) issued under the Obama administration regarding joint employment and independent contractors. We previously discussed the AI on independent contractors here, and the AI on joint employment here and here. Critics of the AIs argued that they amounted to an attempt by the Department of Labor to expand employer liability under the Fair Labor Standards Act without Congressional action or notice-and-comment rule making. For its part, the Obama Labor Department took the position that it was merely providing guidance on existing legal standards.
The DOL gave little in the way of explanation for Secretary Acosta’s withdrawal of the AIs, offering only a three sentence press release:
WASHINGTON – U.S. Secretary of Labor Alexander Acosta today announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors. 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. The department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.
So what does this mean for employers? For most, probably not much. Withdrawal of the AIs certainly indicates that the DOL under Secretary Acosta will be less aggressive in pushing the boundaries of existing law through its enforcement efforts and in court. Businesses that rely on franchise models, temporary employees and contractors can likely breath somewhat easier.
However, as the DOL’s press release notes, withdrawal of these AIs “does not change the legal responsibilities of employers under the Fair Labor Standards Act.” While the AIs represented a broad view of the employment relationship, they were still rooted in existing law and based their analysis on well-established tests for joint employment and independent contractor status. Those basic tests have not changed, and courts were never bound to follow the DOL’s preferred interpretations of the law. Private litigants can still pursue joint employment and independent contractor misclassification claims based upon the interpretations in the withdrawn AIs, and courts may accept some of their arguments. Further, the U.S. DOL’s actions have no direct effect on employer’s parallel obligations under state or local laws governing minimum wage or overtime.