DOL’s Joint Employment Rule Withdrawn

June 8th, 2017 by Trey Barrineau

On Wednesday, Secretary of Labor Alexander Acosta withdrew the department’s 2015 and 2016 informal guidance on joint employment that,  under Obama-era definitions, could have held an employer liable for the labor and workplace practices of independent contractors and subcontractors such as window installers.

The National Association of Home Builders (NAHB) praised the decision.

“Given that independent contractors and subcontractors are critical to housing, we were very concerned about recent efforts attempting to limit their participation in the home building process,” said Granger MacDonald, chair of the NAHB and a home builder and developer from Kerrville, Texas. “Withdrawing these documents will provide more certainty and clarity for home building firms and other small businesses who work closely with subcontractors and independent contractors.”

Under the previous standard, “joint employment” was defined as a worker who is employed by two or more employers, making both of them responsible for compliance with a statute. That would include contractors, subcontractors, staffing agencies and franchisees.

According to John Alan Doran, a partner at the law firm Sherman & Howard, the withdrawal of  the joint employment rule could signal more positive changes ahead for employers.

“In a narrow sense, the rollback of these guidance pieces should be encouraging to employers directly involved in work with independent contractors, leasing agencies, temp workers, other potentially joint employment relationships, and more,” said Doran. “The previous administration made clear that it intended to expansively interpret the definition of employer, while the rollback suggests a more realistic understanding of modern workplace relationships. In a broader sense, the rollback of these guidance pieces may portend more good news for employers. The fact that Secretary Acosta wasted little time reversing these guidance pieces bodes well for the possible reversal of other Obama-era enforcement strategies that seemed to pay little heed to the modern workplace.”

The Labor Department said 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.

“The department will continue to fully and fairly enforce all laws within its jurisdiction,” the agency said in a statement.

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