DOL Secretary Acosta Withdraws Controversial Joint Employer, Independent Contractor Informal Guidance

June 09, 2017

This week, DOL Secretary Alex Acosta reversed two of the Obama administration's major initiatives seeking to broaden employer liability under the wage and hour laws.  Obama's Wage and Hour Administrator David Weil had issued two controversial "guidance letters" regarding a company's liability as a "joint employer" for wage and hour violations committed by its contractors and "clarifying" the status of independent contractors.  Regarding the latter, the letter stated that, in DOL's view, most of those contractors are actually employees.  Critics of the guidance noted that instead of providing clarity, it added only another layer to an already inscrutable employee definition.  Secretary Acosta withdrew both letters, which drew strong praise from House Education and the Workforce Chair Virginia Foxx (R-NC) and Workforce Protections Subcommittee Chair Bradley Byrne (R-AL).  In response, former Administrator Weil stated that "retracting the two administrator interpretations in and of itself does not mean anything" because "they are based on established law, regulation and judicial opinions."  Despite Acosta's actions, the issue remains troubling for employers.  The NLRB is likely to continue to apply a broader definition of "joint employer" at least until President Trump fills the two vacant positions on the Board creating a Republican majority.  More importantly, the Fair Labor Standards Act and most other federal employment laws are subject to a private right of action where a plaintiff's lawyer can seek broad liability in the federal courts.  This recently occurred in the Fourth Circuit, where the court found liability between a company and its contractor because the companies were not "completely disassociated."  HR Policy will be joining other business groups in filing an amicus curiae brief to seek U.S. Supreme Court review of the decision.