U.S. Department of Labor Rescinds Obama-Era Wage and Hour Interpretations

In July 2015, the U.S. Department of Labor (DOL), under the Obama Administration, issued a new Wage and Hour Administrator’s Interpretation (Interpretation) regarding independent contractors. This expansive Interpretation emphasized the DOL’s opinion that “most workers [classified as independent contractors] are employees under the Fair Labor Standards Act’s (FLSA) broad definitions.”

In January 2016, the DOL, under the Obama Administration, also issued a new Interpretation regarding joint employment under the Fair Labor Standards Act (FLSA). According to the Interpretation, “The concept of joint employment, like employment generally, should be defined expansively under the FLSA … .” The Interpretation largely focused on the agricultural, construction, janitorial, logistics and warehouse, and staffing and hospitality industries. As might be expected, industry and employer groups vigorously opposed the new Interpretations.

Those Interpretations under the Obama DOL have now been put on hold by the Trump Administration. On June 7, 2017, the DOL announced the withdrawal of the 2015 Interpretation regarding independent contractors and the 2016 Interpretation regarding joint-employer issues.

Notably, in rescinding these Interpretations, the DOL emphasizes that “[r]emoval of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act … as reflected in the department’s long-standing regulations and case law.”

The DOL’s rescissions of these Interpretations likely will be viewed by industry and employer groups as a retreat from the more progressive policies advocated by the Obama Administration. That being said, however, these rescissions still leave considerable doubt about the viability of the National Labor Relations Board’s expansive treatment of joint-employer status and the myriad state laws governing who is and is not an independent contractor. Thus, employers with issues regarding independent contractors and/or joint employment would be wise to confer with counsel.