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DOL Withdraws Joint Employer Informal Guidance

Published by on June 12, 2017

Although the DOL may have changed its position on joint-employment, employers need to remain cautious of the ongoing commitment of the National Labor Relations Board (NLRB) to its ruling in Browning-Ferris Industries which applied an expansive approach to joint-employer liability under the National Labor Relations Act.

On June 7, 2017, the U.S. Department of Labor (DOL) announced that it had withdrawn its own prior informal guidance on joint employment and independent contractors that was issued in 2015 and 2016. This withdrawn informal guidance applied a broad “indirect control” standard to joint-employment relationships. In a press release, Secretary of Labor Alexander Costa announced the DOL would be withdrawing the informal guidance issued by the Obama Administration that had overturned long standing precedence. A copy of the press announcement can be found here.

Secretary Costa’s announcement withdrew guidance that had greatly expanded the concept of joint employment and independent contractors under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). Under the now rescinded informal guidance, the DOL held the position that an employer could be deemed a joint employer under a vague “indirect control” test and that most workers were employees under the FLSA’s “broad definitions.”

With the withdrawal of this guidance, the DOL may be signaling its preference for the use of the more traditional “direct control” standard to determine an employer’s liability under the FLSA and MSPA. Generally, the “direct control” standard imposes joint employer liability only when employers have direct and significant control over employees. Direct control can be found where an employer not only has the right, but also exercises the right, to control the terms and conditions of employment, such as hiring, terminating and disciplining.

Welter Insight

Although the DOL may have changed its position on joint-employment, employers need to remain cautious of the ongoing commitment of the National Labor Relations Board (NLRB) to its ruling in Browning-Ferris Industries which applied an expansive approach to joint-employer liability under the National Labor Relations Act. That case is on appeal. The NLRB’s rulings and stance is unaffected by DOL’s announcement. Further, employers should also be aware that local laws may apply a different standard for joint employment.

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