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June 12, 2017

Labor Department Throws Out Obama Administration Guidance On Who Is An Employee

The U.S. Department of Labor (DOL) announced last week that it will no longer use standards that were set during the Obama administration to determine whether an individual is an employee or an independent contractor. In 2016, Obama administration guidance had broadly defined the term “employee” and laid out an “economic realities” test to take into account whether the independent contractor's work was an integral part of the employer's business and whether the worker's relationship with the employer was permanent or indefinite. 

The DOL last week also rescinded a 2016 interpretative memorandum on joint employer under the Fair Labor Standards Act. That guidance outlined a test similar to the standard set forth by the National Labor Relations Board under President Barack Obama in the Browning Ferris case. That guidance asked:

  • How much control or supervision a host business had over another;
  • How long the business relationship lasted;
  • Whether the nature of the work was repetitive and rote;
  • Whether the work was integral to the business; whether the work was performed on the premises owned by the business; and
  • Whether the business performed administrative functions. Both policies, issued under the Obama administration, are now void.

The Metals Service Center Institute (MSCI) supports both of the DOL’s actions taken last week. Working with its partners at the Coalition for Democratic Workplace, MSCI has worked to overturn policies like the ones issued by the Obama administration in 2016, which put in jeopardy vitally important business relationships that create jobs, strengthen the American economy, and provide avenues for the American Dream. 

Click here to read more about last week’s DOL announcement.