What the DOL’s Rescission of Obama Administration Guidance Means for Employers

On June 7, 2017, U.S. Department of Labor Secretary Alex Acosta announced that the DOL would withdraw two significant guidance documents issued by the DOL. One, which was issued in 2015 was intended to curb the misclassification of employees as independent contractors. The second was issued in 2016 and was intended to provide greater scrutiny of arrangements in which multiple companies jointly employ workers.

In the statement announcing the rescission, the DOL said the removal of these two guidance documents “does not change employers’ legal responsibilities under the Fair Labor Standards Act…” The DOL stated that it will continue to “fully and fairly enforce all laws within its jurisdiction.” However, the rescission of the documents demonstrates the less aggressive approach of President Trump’s DOL. The withdrawal of these guidance documents signals that the DOL is more employer friendly than under President Obama, and it's expected that the DOL will analyze other regulations, guidance documents and interpretations that reduce employer flexibility.

The withdrawal of these guidance documents could be important in employee legal actions concerning joint employer status or misclassification of worker status. Employee litigants can no longer point to the documents as evidence of the DOL’s position because they have been withdrawn.

Employers should be aware that they still need to exercise caution when classifying workers as independent contractors and be aware of the legal issues associated with using staffing and contracting agencies. The withdrawal of these guidance documents does not alter any DOL regulations, statutes or previous court decisions. However, this development can impact an employer’s use of contracting and staffing arrangements and is an important development in franchise relationships. The National Labor Relations Board’s aggressive stance on joint employer status is not affected by the DOL rescission of the guidance documents concerning joint employment.

Employers with questions about classification of workers as independent contractors or joint employment should contact a member of Larkin Hoffman’s employment, labor and benefits practice.