US DOL Withdraws Guidance on Joint Employment and Independent Contractors, Overtime Rule under Further Review

The US Department of Labor today announced the withdrawal of previous guidance on how the federal department would interpret employee misclassification in areas under its jurisdiction.

While this is a matter of interest for all employers, it should be noted that this does not apply to how the Vermont Department of Labor interprets employee misclassification under this state’s unemployment insurance and workers’ compensation statutes.  There are multiple definitions of employee under different state and federal statutes.

Nevertheless, the debate over independent contractors and employee classification under Vermont law in the House this year focused heavily on the extent to which USDOL definitions and interpretations should or should not be used as models.  AIV will continue to monitor federal developments and how they influence ongoing debate here in Vermont, and will provide updates as warranted.

Look for an update on efforts to reform Vermont classification laws in the coming days.  In the meantime, for more information on the issues addressed in this post, contact us at info@aivt.org.

Employee Classification and Joint Employers

As stated in the June 7 USDOL press release:

“U.S. Secretary of Labor Alexander Acosta today announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors.  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. 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.”

The rescinded the 2016 interpretative memorandum regarding independent contractors explained how the agency would determine whether an employer misclassified an employee as an independent contractor. It also broadly defined the term employee and laid out an “economic realities” test to take into account whether the independent contractor’s work was an integral part of the employer’s business and whether the worker’s relationship with the employer was permanent or indefinite.

The now rescinded 2016 interpretative memorandum on joint employer under the Fair Labor Standards Act outlined a test similar to the standard set forth by the National Labor Relations Board in the Browning Ferris case by asking how much control or supervision a host business had over another; how long the business relationship lasted; whether the nature of the work was repetitive and rote; whether the work was integral to the business; whether the work was performed on the premises owned by the business; and whether the business performed administrative functions.

Overtime Rule

Additionally, the USDOL announced in the next couple weeks it will be releasing a request for information (RFI) on the overtime rule finalized by the Obama Administration. This rule is currently enjoined by a federal court in Texas, but would raise the salary for those employees exempt from overtime pay to $47,476 and would tie future increases to the Consumer Price Index.