The U.S. Department of Labor Withdraws Obama-Era Guidance Regarding Independent Contractor versus Employee Classification

by Hirschfeld Kraemer LLP
Contact

Hirschfeld Kraemer LLP

As we previously blogged here and here, the Obama Administration, through the U.S. Department of Labor (“DOL”) as well as the National Labor Relations Board (“NLRB”), made it clear early and often that it was going to take an active role in reshaping the landscape of employment and independent contractor relationships. Notably, in the Browning-Ferris ruling, the NLRB significantly expanded the doctrine of joint employers and ruled that franchisors may well be joint employers of a franchisee’s employees. The DOL issued new guidance regarding the determination of whether workers are employees or independent contractors (concluding that most workers currently classified as independent contractors are indeed employees under the “economic realities” of the relationship between the worker and the entity he/she works for). The DOL also issued new regulations that significantly raised the minimum salary floor necessary to be considered exempt, and thereby raised the very real possibility (or inevitable conclusion) that many employees considered to be exempt from overtime pay under the Fair Labor Standards Act (“FLSA”) would now be non-exempt, hourly employees eligible for overtime pay.

That was then, and this is now. As we previously blogged here, the overtime rules were enjoined by a United States District Court in Texas back in November 2016, and effectively left to die on the vine by the incoming administration. Today, in a short press release, the DOL has announced that it is withdrawing its Obama-era guidance on independent contractors. The press release also noted that “[r]emoval of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act… [t]he department will continue to fully and fairly enforce all laws within its jurisdiction…”

So what does this mean? Although the impact of this withdrawal of prior guidance will be muted in states like California with very active state labor departments/commissioners and aggressive plaintiffs’ bars where the state’s standards are equal to or greater than those created by the FLSA, it is still big news, at least symbolically. Although not surprising, this move is a follow-through by the Trump Administration that it would reverse what it views as onerous executive guidance and regulations in favor of a more business-friendly tone. And it is probably fair to say that the Trump Administration will move, either by some form of executive action, or through a Congressional bill, to limit or eliminate the “joint employer” test enunciated by the NLRB in Browning-Ferris, even if some or all of the NLRB’s joint employer test is upheld on appeal (oral argument in this matter was held before the U.S. Court of Appeals, District of Columbia, on March 9, 2017, so an appellate decision could be forthcoming soon).

Takeaways

For California employers, today’s press release is a continued signal of a change of tone at the federal level, but really should not change the day to day business of complying with the generally higher bar set by California wage and hour laws. Moreover, it bears repeating, as we have stated in prior blog posts, that nowhere in the FLSA is the term “employee” defined in any helpful or meaningful way—and California law is similarly unhelpful in this regard. So the various California and federal tests for independent contractor-versus-employee status, which, though varied, generally look to the totality of the circumstances at hand (including notably the degree of control exercised over the worker’s tasks), are still squarely in the mix. For this reason, employers would be well advised to work with counsel to carefully review their independent contractor/employee classifications to fully assess any exposure risk.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hirschfeld Kraemer LLP | Attorney Advertising

Written by:

Hirschfeld Kraemer LLP
Contact
more
less

Hirschfeld Kraemer LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.