Human Resources News & Insights

Feds kill two ’employee-friendly’ rule interpretations, but will it help HR?

The DOL’s latest move gives employers some hope that the aggressive, pro-employee enforcement agenda of the agency’s previous administration is coming to an end.

The agency announced the withdrawal of its Administrator Interpretations (AIs) on joint employers and independent contractors.

What the DOL initially said

In the Interpretation on joint employers, the DOL had taken the position that many business partnerships – including those involving staffing agencies and employers – may fall into the category of “joint employer.”

In the case of joint employers, all common businesses are liable for any FLSA violations.

With the guidance on ICs, the feds said most contractors would likely fall under the expansive definition of “employee” under the FLSA.

Specifically, the DOL said:

In sum, most workers are employees under the FLSA’s broad definitions. The very broad definition of employment under the FLSA as “to suffer or permit to work” and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor. The factors should not be analyzed mechanically or in a vacuum, and no single factor, including control, should be over-emphasized. Instead, each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee).

The DOL didn’t any specific reasoning for the withdrawal of the Obama-era Administrative Interpretations. Now the question is: What does the DOL’s move mean for employers proceed?

Does not change the FLSA

On one hand, employers should take the announcement as a sign of good things to come.
Some employment attorneys believe the feds’ move is a clear indication the Acosta DOL will back off of its aggressive enforcement of employer issues like misclassification.

At the same time, employers shouldn’t put too much stock in the DOL’s latest move. For one thing, a number of courts have already handed down rulings that follow the guidance in the AIs. And there’s no reason to believe they won’t continue to rule that way moving forward.

Plus, as the DOL pointed out in the recent announcement, the AI’s were informal guidance not rules. According to the feds, the withdrawal “does not change the legal responsibilities of employers under the Fair Labor Standards Act.”

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