Today the United States Department of Labor (“DOL”) withdrew two Administrator Interpretations (“AI”). In particular, the DOL rescinded the AI issued on July 15, 2015, which targeted employer misclassification of employees as independent contractors under the Fair Labor Standards Act (“FLSA”) and emphasized that the pertinent inquiry in determining whether an individual is an “employee” versus an “independent contractor” is whether the individual is “economically dependent” on the employer such that he is an employee. The July 2015 AI set forth a six-factor “economic realities” test to guide employers in determining whether an individual is “economically dependent” on the employer and stressed that the six-factor test should be applied “broadly.” A more detailed summary of the July 2015 AI can be accessed here.
The DOL also rescinded the AI issued on January 20, 2016, which expanded the “joint employer” doctrine for purposes of the FLSA and Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”). In this AI, the DOL provided two analyses to determine whether otherwise separate businesses might be considered joint employers of the same workers: (1) horizontal joint employment and (2) vertical joint employment. The DOL set forth factors that are specific to each analysis. The issue of joint employment has been at the center of recent lawsuits asserting employment claims against franchisees, primarily in the fast food industry, as well as the national franchisors. A more detailed summary of the January 2016 AI can be accessed here.
The DOL qualified its withdrawal of these AIs with the statement that “[r]emoval of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act as reflected in the Department's long-standing regulations and case law. The Department will continue to fully and fairly enforce all laws within its jurisdiction including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.”
In light of the DOL’s rescission of the AIs concerning joint employment and the misclassification of “employees”, the DOL’s guidance on these issues is now limited to its regulations, opinion letters, pertinent provisions of the Field Operations Handbook, and any briefs it has filed in connection with lawsuits.