Signaling a clear departure from Obama-era enforcement priorities, the Trump Administration announced on June 7, 2017 that it has withdrawn two Department of Labor guidance documents on worker classification and joint employer status. The worker classification Administrator Interpretation Letter (“AIL”) issued in 2015, strongly favored employee classification over independent contractor classification and took the position that almost all workers would be viewed as employees by the Department of Labor. The joint employer AIL from 2016 also indicated the Department of Labor’s preference for a broad interpretation of joint employment. This enforced the Department of Labor’s position that virtually all related employers that exercise control over a worker are joint employers, resulting in overtime liability for aggregated hours between the joint employers. The joint employer AIL focused on the agricultural, construction, hospitality, janitorial, warehousing and staffing industries, but applied to all sectors of the economy, forcing all employers to take note. Both AILs laid out multi-factor tests to determine worker classification and joint employer status in an attempt to clarify the myriad tests various circuit courts applied, as well as disparate tests applied by other enforcement agencies.
The Department of Labor, Wage and Hour Division, immediately removed both AILs from the guidance section of its website on June 7, 2017. However, the Department’s press release noted that removal of the AILs does not change an employer’s legal responsibilities under the Fair Labor Standards Act, its regulations, or related case law. The release also stressed that the Department will continue to fully and fairly enforce all laws within its jurisdiction. Given the broad view of the AILs, this change has been interpreted as a win for business since courts will likely revert to the patchwork of narrower pre-AIL tests to determine these issues in various jurisdictions. While this may signal a dialing-back of enforcement in these areas, employers should still regularly review worker classification and joint employer status for compliance with the FLSA. Saul Ewing will continue to cover developments in this area on the WISE Blog and guide employers through the tangle of multi-factor tests and considerations in this complex area.
