Employers in California and across the United States should be aware of changes that took place in June 2017 regarding the regulation of independent contractors and joint employment. The new Department of Labor under President Trump has rejected the Administrator’s Interpretations established under Obama. While these changes are not law and do not affect an employer’s legal responsibilities, they may indicate a shift in priorities with the new DOL.
The changes may be considered a roll-back to a more traditional stance on identifying workers as independent contractors or joint employees. Under Obama, the focus on these types of employment was put under a higher degree of scrutiny with an aim to consider most workers actual employees and reduce the prevalence of workers considered independent contractors. With those changes now eliminated, employers can focus on the established case law and traditional use of the economic realities test that has long been a way of measuring a worker’s independent status.
In terms of joint employment, the removal of the AI also removes the more expansive analysis and interpretation of two types of joint employment. No longer will ‘vertical” or ‘horizontal” joint employment be clearly differentiated. Instead, agencies will also rely on the economic realities test to gauge whether or not a worker is considered a joint-employee and how to deal with that situation from a regulatory standpoint.
It is not yet clear what legal changes or implications the rejection of the AI may have. Workers’ compensation claims and lawsuits against employers in terms of liability for payments or working conditions may be indirectly affected. A lawyer who focuses on employment law may be able to answer questions about these effects.