On June 7, 2017, the United States Department of Labor (DOL) reversed its previous guidance issued during the administration of President Barack Obama that broadened the circumstances in which employers could be held liable for misclassification of employees as independent contractors, and as a joint employer with a separate business. New Secretary of Labor Alex Acosta announced that the DOL was withdrawing two letters: (1) a 2015 letter that encouraged scrutiny of employer-independent contractor relationship pursuant to the “economic realities test;” and (2) a separate 2016 letter that interpreted joint employment under the Fair Labor Standards Act (FLSA) with a separate entity as occurring, so long as both employers exercised “indirect” control over the worker. Although the letters were never legally binding, they served as a blueprint for how the DOL enforced federal laws and represented persuasive authority to courts.
