
The DOL’s announcement this week appears to signal a major course reversal
in the wage and hour arena, particularly from 2016 when its Wage & Hour Division had made joint
employment “a major focus.” This is likely true even though the DOL said, in announcing the
withdrawal: “Removal
of the two administrator interpretations does not change the legal
responsibilities of employers under the Fair Labor Standards Act . . . as
reflected in the Department’s long-standing regulations and case law.”
There
can be little doubt about the significant differences in perspective and
approach to wage and hour enforcement between the two DOL leaders, David Weil (former) and Alexander Acosta
(current).
The DOL’s withdrawal of prior interpretive guidance signals, despite its public
statements, a likely shift away from earlier enforcement agendas. Wage and hour
liability for two separate companies based on a joint employment finding by the
DOL under Acosta is less likely now, as is liability based on rejection of
independent contracting status.
But as
the DOL points out, the actual law interpreted by the withdrawn guidance has
not changed, so wage and hour liability risks based on joint employment or
misclassification of independent contractors have certainly not been
eliminated.
Further, this action by the
DOL has no effect on application by the National Labor Relations Board (NLRB)
of its new joint employer standard it set forth in 2015. That standard has
caused great concern among employers nationwide. Under the NLRB standard, separate companies
can be jointly responsible for unfair labor practices and collective bargaining
duties based on the mere potential, even if it is never exercised, that one of
them could have an impact on the terms and conditions of employment for the
other’s employees. The NLRB’s General Counsel
believes it will be difficult for the NLRB to undo this new test.
So while the DOL announcement
this week is good news, employers are not out of the woods on joint employer or
independent contracting issues. The prudent employer will continue to conduct
careful analysis and planning and to exercise caution in these areas.
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