Secretary of Labor Acosta Pulls Joint Employer Guidance Issued By Obama Administration

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Secretary of Labor Acosta Pulls Joint Employer Guidance Issued By Obama Administration

 By: Michael Saqui and Rebecca Hause-Schultz

On June 7, 2017, Secretary of Labor Alexander Acosta announced that the Department of Labor (“DOL”) was withdrawing two informal guidance letters that it previously issued on joint employment in 2015 and 2016 during the Obama administration. These guidance letters expanded the “joint employer” doctrine - which sets forth the conditions for when one company can be liable for employment and civil rights violations made by another company - stating that an employer who “indirectly” controls another employer’s workplace could be liable. This “indirect” standard significantly expanded an employer’s joint employer liability, and created confusion for employers as to what indirect control meant.

With these guidance letters withdrawn, the DOL goes back to the former joint employer test, which found that an employer was a joint employer where it had “direct” control over the other’s workplace. The guidance marks a “return to traditional standards.” However, the joint employer issue will be litigated in the court system—and the DOL does not have the power to control how the courts interpret the law. It has also been noted, and particularly important in California, that liberal states may opt to step in and adopt rules more similar to those under the Obama administration. (See Law 360: 3 Takeaways from DOL’s Nix of Obama-Era Memos)

While the guidance has been withdrawn, this alone does not change the legal responsibilities of employers under the Fair Labor Standards Act (“FLSA”) or the Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”). Further, the withdrawal of the guidance does not force the National Labor Relations Board (“NLRB”) to change its similar “indirect control” joint employer test.


This is good news for employers who saw eight years of joint employer liability expansion under the Obama administration. However, it is important to remember that, although this move signifies that the Trump administration will begin rolling that expansion back, it does not change the NLRB joint employer standard, state joint employer interpretations, MSPA, or FLSA. Further, the DOL does not have the power to determine how the court system interprets the law. If you have questions about this change and how it will affect your business, contact the experts at The Saqui Law Group.


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