Two controversial employment guidance letters issued by the Obama administration are now being retracted by the new President and his Department of Labor staff. The two letters were originally issued by the Wage & Hour Division (WHD) and aimed to limit worker misclassification. The letters also increased instances where businesses could be considered a joint employer with a worker. This enabled stricter guidelines to be put in place regarding who can truly be classified as an independent contractor.
Rules Regarding Classification of Workers
The first letter, issued July 15, 2015 and named Administrator Interpretation No. 2015-1, provided guidance on how an independent contractor would be defined by the WHD. Prior to the letter, the methodology for classifying workers was based heavily one how much control a business had on an individual’s workload; while the new guidelines would focus more on how economically dependent a worker is on a business. The initial guideline determined that many workers considered to be independent contractors should instead be classified as employees. This would entitle workers to employee benefits such as overtime pay which they were not previously eligible for as an independent contractor. Those opposed to the rule argued that it would create a too heavy a burden on employers.
Employment Relationships Defined
Administrative Interpretation No. 2016-1, the second letter, issued January 20, 2016, provided guidance on how the WHD would classify who is legally responsible to fulfill obligations to an employee. This letter defined who an employer was, as well as delved into vertical joint employment relationships and liability. Vertical joint employment exists when a worker is economically dependent on one employer and another involved entity, such as with franchise scenarios. This interpretation created a much greater liability for employers who frequently secure staff through third party companies (such as staffing agencies or subcontractors). This would obligate the employer to pay out overtime compensation and benefits to eligible employees.
Rollback of Guidance May Impact Workers’ Rights
The Department of Labor (DOL) has retracted both letters under the direction of the Trump administration. While it is a win for employers, hard-working employees who should be eligible for additional benefits may now be denied. Without these interpretive guidelines in place, workers may no longer be entitled to overtime compensation or other benefits. While the letters are no longer available on the DOL website, fact sheets that discuss fair employment and how to classify an employee remain. Some question if these facts sheets will be discarded next, further increasing the likelihood that employees will suffer unfair treatment.
South Jersey Wage and Hour Lawyers at Sidney L. Gold & Associates P.C. Advocate for Fair Employment Practices
If you feel your employer is not following state and federal employment laws, you may be eligible for recourse and compensation. Our South Jersey employment lawyers will work tirelessly to help you navigate the complexities of employment law in New Jersey. Call today to speak with a South Jersey wage and hour lawyer to learn how you are being affected by employer noncompliance. Serving South Jersey and Philadelphia, the law offices of Sidney L. Gold & Associates P.C. aggressively advocate for employee rights. Call 215-569-1999 or contact us online to schedule a free consultation.