Thank you Fox Rothschild LLP’s Steven Ludwig for forwarding this to me.
Yes, there are other developments going on with the Trump Administration that have nothing to do with Russia, Twitter, and fake news.
Today the Department of Labor withdrew its 2015 and 2016 informal guidance on joint employment and independent contractors. Why is this important, you ask? Because during President Obama’s eight years in office, the DOL and its state counterparts upped the efforts to investigate and identify companies that were improperly classifying individuals as independent contractors. The increased enforcement efforts led to the DOL taking a more expansive view of joint employment, and a higher standard for employers to meet to establish independent contractors. These enforcement efforts culminated in the DOL’s 2015 and 2016 informal guidance on joint employment and independent contractors. Under the Obama Administration’s independent contractor test, the key inquiry was whether the independent contractor was economically independent. For joint employment, the Obama Administration’s DOL investigators looked at whether one employer exercised indirect control over the individual. Today’s rescission of the Obama Administration’s tests returns the DOL to pre-Obama standards. Thus, the DOL is reinstating the direct control test for joint employment (as opposed to the more expansive indirect control standard) and right of control test for independent contractors (instead of the more liberal economic independence test).
Bottom Line: The DOL still will investigate the classification of workers as independent contractors, and whether one employer can be held liable for another employer’s violations. However, with today’s rollback to pre-Obama tests for joint employment and independent contractors, it may be easier to classify individuals as independent contractors, and it will be more difficult to hold one employer liable for the employment law violations of another employer.