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Has The Dismantling of the Labor Regulatory Regime Commenced?

June 14, 2017

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The Trump campaign promised regulatory reform, and most experts expected the new administration would target some of the Department of Labor regulations, enforcement actions, and guidances under the Obama administration that impacted the employer and employee relationship.  As predicted, under the leadership of new Labor Secretary Alexander Acosta, the DOL is reviewing and revising the current regulatory regime. 

Most recently, in a June 7, 2017 press release, the DOL announced the withdrawal of its informal guidance on independent contractors and joint employment.  As Nexsen Pruet highlighted last year, the DOL had issued an Administrator’s Interpretation that expanded the DOL’s definition of “joint employment” under the Fair Labor Standards Act and concluded that “most workers [including those classified as independent contractors] are employees under the FLSA.” 

Many believe these actions signal movement by the new administration to rein in what was considered an expansion of the term “employment” and may reflect that the DOL will issue Opinion Letters in place of Administrator’s Interpretation in the future.  However, given that an Administrator’s Interpretation does not have the force of law and, theoretically, was written to reflect existing law, some have indicated that this recent action by the DOL will have no real effect on the current workplace. 

First, the DOL specifically caveated its decision by emphasizing 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.” 

Second, the decision does not resolve other (often conflicting) interpretations of joint employment and independent contractor status under various state laws or by other regulatory agencies or courts.  As Nexsen Pruet highlighted earlier this year, the Fourth Circuit Court of Appeals, which has jurisdiction over North and South Carolina, set forth a six-factor test to determine whether “joint employment” exists.  This decision was not impacted by (and the Court did not cite) the Administrator’s Interpretations.  Therefore, because the holding was largely consistent with the more expansive definition of “joint employment” of the withdrawn Administrator’s Interpretations, this six-factor test is likely to remain in force and diminish any immediate impact of last week’s decision by the DOL for our area.

We expect that the DOL will provide guidance on other matters of concern that were highlighted in the previous administration, such as the new overtime rules.  When it does, we will update these changes accordingly.


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