DOL Withdraws Controversial Guidance on Independent Contractor and Joint Employer Status

Regulation | July 10, 2017 | by Jennifer Hilliard

The U.S. Department of Labor (DOL) on June 7, 2017, withdrew two controversial Obama-era guidance letters relating to independent contractor classification and joint employment status.

The independent contractor guidance issued in 2015 reflected the DOL’s stance under the Obama administration that “most workers are employees” insofar as the Fair Labor Standards Act is concerned. That guidance made classifying an individual performing work for an organization as an independent very difficult, and foreshadowed greater scrutiny with respect to the classification of workers by DOL.

The joint employment guidance issued in 2016 greatly expanded the situations in which DOL would construe two or more employers to be “joint employers” and thus responsible for the same workers. The guidance had significant implications for franchised businesses, temporary and contract workers, and affiliated business entities, among others.

Despite the withdrawal by DOL of the guidance, the case law on which DOL based its positions remains in effect and other agencies, such as the National Labor Relations Board (NLRB), the composition of which is still dominated by Obama-appointees, is free to continue applying Obama-era guidance. Accordingly, LeadingAge members are encouraged to contact legal counsel prior to making any modifications to their employment policies and practices based on the withdrawal of the DOL’s guidance.