The Department of Labor (DOL) announced its decision today to rescind two Obama-era guidance letters that aimed to expand the joint employer doctrine and limit the misclassification of workers under the Fair Labor Standards Act (FLSA).
The joint employer doctrine refers to an employment arrangement where two or more employers assert sufficient control over the terms and conditions of employment so as to be jointly responsible for complying with employment laws, such as the FLSA.
For over a decade, the National Labor Relations Board (NLRB) maintained the position that control over employment matters must be “direct and immediate” to establish joint employer status. This changed in 2015 with the controversial Browning-Ferris decision, in which the NLRB expanded the joint employer doctrine to include situations where a business exerts indirect control over employees. The DOL then agreed with the NLRB’s approach by issuing informal guidance letters about six months later that similarly sought to broaden the definition of joint employment and use that expanded definition to extend liability for potential employment law violations committed by subcontractors and franchisees to their primary contractors and franchisors, respectively.
President Trump’s pick for Secretary of Labor, Alexander Acosta, who was confirmed by the Senate just over one month ago, made the announcement today of the withdrawal of the DOL’s informal guidance letters on joint employment and independent contractors. This decision is a first step in reversing the Obama Administration’s efforts to broaden the joint employer doctrine. Businesses are not out of the woods yet, however. The Browning-Ferris decision is on appeal to the D.C. Circuit Court of Appeals, which heard oral arguments on it in March of this year. Now, employers must wait to see whether the D.C. Circuit agrees with the NLRB’s expanded definition of “joint employers” or completes the reversal of the Obama-era expansion of the doctrine in agreement with the DOL’s current about-face on this issue.
