Global Matters wrote about the expanded definition of “employee” versus “independent contractor” released by the Obama administration Department of Labor (DOL) in July 2015: Independent Contractor Or Employee: The U.S. Government Takes a Broad View Of The Definition of “Employee”. We noted that the 2015 guidance offered a “broad” interpretation of the term “employee” under the federal Fair Labor Standards Act which might have significant impact on U.S. employers. In 2016, the DOL also released an Administrator’s Interpretation on joint employment. There, the DOL took the position that joint employment is “more common” and “should be defined expansively.”
Last week the Trump administration Department of Labor withdrew these interpretations on joint employment and independent contractor designations, which had the potential to increase employers’ liability for misclassification and for wage-hour penalties. Despite the DOL’s withdrawal of these Administrator’s Interpretations, misclassification and joint employment will continue to be important issues for employers. For example, in January 2017, one federal appellate court created its own test for determining joint employment under the Fair Labor Standards Act. And in May 2017, the New York City “Freelance Isn’t Free Act” law became effective, which significantly enhances protections for the city’s 1.3 million freelance workers (in other words, independent contractors).
Most countries have laws specifying employment classifications for purposes of wage and benefits determinations. For instance, Canada recognizes a unique “dependent contractor” designation which must be considered. See the Global Matters blog: Independent Contractor Or Employee: Canada Has a Third Classification. If you have questions about your work force and whether your job positions are correctly designated as “employee” or “independent contractor” or other country-specific designations, contact the employment law department of your Ally Law member firm. Failure to designate your positions in accordance with applicable law can result in significant penalties and possibly litigation. For more information about our services in this area, contact us at email@example.com.