The Department of Labor (DOL) has announced that they are rescinding their current joint employer and independent contractor rules, effective on September 28, 2021. This decision is not surprising. DOL announced their intentions to roll back these rules in March 2021, as we reported to you in an earlier newsletter this year. Both rules were issued under the Trump administration and effective as of March 2020. However, in rescinding the rules, DOL explained that the new definitions that were previously issued impermissibly narrowed the definition of a joint employer and independent contractor under the Fair Labor Standards Act (FLSA).
Now, with the rules set to rescind, the DOL will return to their prior tests for joint employers. Joint employment occurs where two different businesses share the right to control and supervise employees in their workforce. However, determining joint employership is not always so simple. Whether an employer is a joint employer, and thus liable for wage and hour violations under the FLSA, involves a multi-factored analysis into a business’s ability to hire, fire, supervise, or otherwise control the work of an employee.
On one hand, the rules issued under the Trump Administration clarified the definition of a joint employer by narrowing it, which resulted in more certainty for employers for when they may be liable for wage and hour violations as a joint employer. On the other hand, the rules conflicted with decades of rules and guidance by the DOL, reportedly resulting in “immense confusion.” Moving forward, it is unclear whether the DOL will promulgate new rules with respect to joint employers and independent contractors. In the meantime, employers should revert to the processes used to determine joint employer and independent contractor status as were used prior to March 2020.
The attorneys at Fishel Downey Albrecht & Riepenhoff, LLP routinely advise public and private employers on compliance with the FLSA and other state and federal employment regulations. If you have any questions about this or any other matter, please contact us at info@fisheldowney.com or call 614-221-1216.