Pendulum Swings Back - DOL to Rescind Regulations re Joint Employment and Independent Contractor Status

The U.S. Department of Labor (“DOL”) plans to rescind a Trump-era regulation on joint employment and stop an impending regulation on independent contractor use. The joint employment rule took effect in March 2020 and limited employers’ liability under the Fair Labor Standards Act. A federal district court, however, vacated large portions of the rule later that year. The independent contractor rule, scheduled to take effect this coming May, sought to implement a very broad "economic reality" test for independent contractor status.

The joint employment rule involves a test to determine whether two employers should be held jointly responsible for FLSA violations with respect to a single employee. The Trump administrations rule was very friendly to employers to the detriment of employees but also left a lot of room for interpretation. This eventually led a court to determine that the "vertical" relationship portion of the rule, which addressed relationships like those involving staffing agencies, was inconsistent with the statute. The remainder of the rule remains intact, at least until the Biden administration revokes it.

Read: DOL’s Announcement