The Management Series

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Aug 2017

Early Signs of Employer-Friendly Labor Dept.

Candidate Donald Trump was seen as solidly pro-business, and early signs so far are that President Trump’s Labor Department will lean toward employers, at least on wage and hour disputes.

Among the strongest indicators to date is the DOL’s decision in early June to withdraw two “guidance letters” issued by the department under the Obama administration, says attorney Patrick McMahon on Foley & Lardner’s Labor & Employment Law Perspectives blog.

“While DOL guidance letters are not binding law, they give a strong indication of how the DOL interprets the Fair Labor Standards Act (FLSA) and similar federal employment statutes,” McMahon says.

“These indications are important, because Secretary [Alexander] Acosta had a mixed yet largely muted reception from both parties during his confirmation hearings and was endorsed by a number of unions. In particular, he assured Democrats that he would put the interests of workers first. However, these letter withdrawals show that he is certainly mindful of employers’ needs as well.”

Both withdrawn guidance letters were related to contractors, individual contractors or employees of a contractor and addressed whether they should be considered a company’s employees for the purposes of wage and hour laws.

The letter on independent contractors had established tests to determine whether the contractor should be treated as an employee. Withdrawal of the letter, McMahon wrote, “while not dispositive, permits employers with an enhanced ability to argue that workers qualify as independent contractors rather than employees.”

The second letter had helped to expand the joint employer doctrine such that even a business entity with very little control, if any, over an employee could still be considered a joint employer. Withdrawal of that letter returns the old standard of actually exercising some control over a contractor to have joint liability.

While the department appears to be taking a more relaxed approach on the issue of contractors, employers shouldn’t assume that the DOL’s 1,000 or so wage and hour investigators are necessarily going to be more easy-going than they were under Pres. Obama.

Acosta has not named a director to oversee the troop of inspectors, so some of them “seem to be enforcing minimum wage and overtime laws by adhering to and following policies that existed” before Trump took over the White House, says Mark Tabakman, an employment lawyer with Fox Rothschild, in his article “Is There, Or Will There Be, Erratic Enforcement of the FLSA Under Trump?”
“I expected the DOL to be more business friendly under this administration,” he says, “but if the agency does not get organized, there will be no clear direction.”

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