Every time you turn on the news some shake-up is happening in Washington. Keeping track of all the policy and administrative changes feels like a full time job—and really it is. But when you’re managing a workforce program, you are busy. Your time and attention are pulled in a million directions and that leaves you with very little time to proactively weed through legislative changes that can impact your business. Have you ever wondered if there are significant compliance exposures that you’re missing?
If you miss something important, what could happen to you and your company? Is there enough time in the day to do what you need to do to truly be successful at work?
If you’ve worried about these things, you’re not alone! It’s important to make these considerations. We’re here to help you. We track legislative and compliance changes thoroughly and help our partners spot problems and potential problems and find the solutions they need to be successful.
Changes at the Department of Labor
One of the latest changes we’re tracking on Capitol Hill relates to independent contractors, joint employment and how the Department of Labor is changing their guidance for both. Read on to see what this actually means and what the impact could be for you.
On June 7, the Department of Labor under Secretary of Labor Alexander Acosta, withdrew the independent contractor and joint employer Administrator Interpretations that were issued during the Obama administration. Two burning questions arise in regard to this announcement:
- What was rescinded?
- Why is it important for employers to be aware of the change?
What independent contractor and joint employer interpretations were rescinded?
Under the Obama Administration, Dr. David Weill, the head of the Department of Labor, Wage and Hour Division, issued two Administrator’s Interpretations.
- The first set the position that the DOL was not bound by the traditional “common law” tests of the courts in determining who was an independent contractor. Instead, The Department would look to the broad definition of who is an “employee” under the Fair Labor Standards Act (FLSA), and presumed under the “suffer or permit of work” definition most workers would fall under the employee category.
- The second interpretation took on the fact the modern workplace contains workers who are engaged via many “tiered” employment arrangements such as third party employment agencies, supply chain or franchising arrangements. The 2016 interpretation provided guidance on what would be considered a “horizontal joint employer” arrangement and a “vertical joint employer” arrangement.
Why is it important?
Administrator Interpretations do not carry the weight of law, but they do indicate how the Department will administer the law and what part of the statutes they see as significant for purposes of enforcement.
Although the withdrawal may be seen as a signal to a more “employer friendly” administration, it is noteworthy that in the press release announcing the withdrawal, the DOL clearly stated, "removal 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."
Conclusions and impact:
The guidance under the Obama administration has been withdrawn, but existing statutes and case law remain. Employers should still be careful about how they classify workers and ensure they continue to use best practices and due diligence to ensure their workers are correctly classified.
If you work with independent contractors make sure you’re properly engaging and documenting them. Don’t wait for a crisis. Take steps now to proactively decrease your compliance risk so your program can stay healthy.
Stay connected and informed - don't forget to subscribe!