Secretary of Labor Alexander Acosta reversed two policies adopted during the Obama administration that employers saw as extreme and unreasonable.
Originally adopted as “administrative interpretations” by former Wage and Hour Division Chief David Weil, the two policies expanded joint liability for companies using temproary staffing firms, and promoted the idea that all independent contractors are in reality misclassified employees.
Both of these policies were gifts to labor unions who had been trying to organize fast food and other franchise operations, and who have waged an ongoing campaign to organize independent contractors by having them redefined as employees.
The joint liability policy was seen as a direct threat to many retailers. To Matthew Shay, president of the National Retail Federation called Acosta’s announcement of the policy changes “an important first step in reversing one of the most onerous regulations imposed by the previous administration on businesses.”
Matt Haller, spokesman for the International Franchise Association, added: “We are pleased the DOL is taking first steps to undo this costly regulation created by the previous administration.” He also called for a legislative solution because other agencies have embraced the same concept.
Since 2014 the Occupational Safety and Health Administration has held that companies that use temp workers are equally responsible for their safety as are the staffing firms that hire them. A National Labor Relations Board joint liability policy is currently under review by the Supreme Court.
As for the DOL independent contractor policy, attorneys warn that certain states, tort lawyers and unions like the Teamsters can be expected to continue their challenges to IC status.
The law firm of Scopelitis, Garvin, Light, Hanson & Feary warns employers “to remain vigilant in both actual practices and documentation – for example, proper contracts – to sustain legally supportable independent contractor relationships.”