Archive
DOL Issues Opinion Letter Classifying Workers in the Gig Economy As Independent Contractors
The U.S. Department of Labor (DOL) recently issued an Opinion Letter analyzing the classification of workers in the virtual marketplace or “gig economy.” This refers to companies that operate in the “on-demand” or “sharing” economy, using online and smartphone applications to connect consumers to service providers in a wide variety of services, such as transportation, cleaning, delivery, and shopping.
The DOL was asked to analyze the classification of such service providers under the Federal Labor Standards Act (FLSA), ultimately deciding that based upon the facts provided by the unidentified company in question, the service providers were independent contractors.
This is vitally important in that independent contractors are not afforded the same protections under the FLSA as employees. For example, employees are entitled to minimum wage, overtime pay, and other benefits under the FLSA, while independent contractors are not. Continue reading in our Employment Law Alert.
UPDATED: Federal District Court Reinstates EEO-1 Pay Data Reporting Requirements (For Now)
By: Amanda Thibodeau
As we previously reported, in March 2019 the U.S. District Court for the District of Columbia issued a ruling concluding that the White House Office of Management and Budget (“OMB”) did not have a sufficient basis to stay pay reporting data requirements (known as “Component 2”) previously announced by the U.S. Equal Employment Opportunity Commission (“EEOC”).
On April 3, 2019 the OMB filed a brief with the U.S. District Court for the District of Columbia proposing a September 30, 2019 deadline for the EEOC to complete the Component 2 pay data collection, which was approved by the Court later that month.
On May 1, 2019, the EEOC announced it expects to begin collecting the Component 2 pay data for both 2017 and 2018 calendar years in mid-July 2019 in anticipation of the September 30, 2019 deadline. The EEOC expects to open a submission portal for employers to submit that data this summer. A copy of the published announcement can be found here.
Employers are still expected to submit their 2018 Component 1 data by the May 31, 2019 deadline.
The Morse Employment Law Group will continue to monitor this issue and provide updates as they become available.
For more information, please contact Matthew Mitchell or Amanda Thibodeau.
Department of Labor Proposes New Interpretation of Joint Employer Status Under The Fair Labor Standards Act
By: Amanda Thibodeau
On April 9, 2019, the United States Department of Labor (“DOL”) published a notice of proposed rulemaking (the “NPRM”) to amend its existing regulations regarding so-called “joint employer” status under the federal Fair Labor Standards Act (the “FLSA” or the “Act”).
The FLSA requires covered “employers” to pay nonexempt employees at least the federal minimum wage for all hours worked and overtime for all hours worked over 40 hours in a workweek. The Act also contemplates scenarios in which other “persons,” in addition to the nominal employer, may be jointly liable for wages due to an employee under the Act. This concept is generally known as joint employer wage liability (although the term “joint employer” is not specifically used in the language of the FLSA). Joint employer status under the FLSA implicates questions such as:
- Is a franchiser liable for the wage obligations of its franchisees?
- Is an institutional investor liable for the wage obligations of its portfolio businesses?
- Is a parent corporation liable for the wage obligations of its subsidiaries?
In 1958, the DOL issued regulations interpreting joint employer status under the Act. Those regulations instructed that multiple persons or entities may be jointly liable for wage obligations due to an employee if they are “not completely disassociated with” respect to the employment of an employee. This open-ended standard, which remains the current DOL benchmark on the subject, has been the subject to debate for nearly sixty years.
The DOL indicates that the purpose of the NPRM is to make the determination of joint employer status under the FLSA “simpler and more consistent.”
A New Test For Joint Liability Status
The NPRM proposes a four-factored test to determine when a person or entity shares wage liability for an employee with the nominal employer. The four factors are whether the person or business entity:
- hires or fires the employee;
- supervises and controls the employee’s work schedule or conditions of employment;
- determines the employee’s rate and method of payment; and
- maintains the employee’s employment records.
The NPRM clarifies that that “the potential joint employer must actually exercise . . . one or more of these indicia of control to be jointly liable under the Act.” (Emphasis supplied). The reserved, but unexercised, contractual right to act in relation to an employee “is not relevant for determining joint employer status.” In addition, the NPRM provides a set of examples that illustrate the limits of the four-factor test:
- The potential joint employer’s business model—for example, operating as a franchisor—does not make joint employer status more or less likely under the Act.
- The potential joint employer’s contractual agreements with the employer requiring the employer to, for example, set a wage floor, institute sexual harassment policies, establish workplace safety practices, require morality clauses, adopt similar generalized business practices, or otherwise comply with the law, do not make joint employer status more or less likely under the Act.
- The potential joint employer’s practice of providing a sample employee handbook, or other forms, to the employer; allowing the employer to operate a business on its premises (including “store within a store” arrangements); offering an association health plan or association retirement plan to the employer or participating in such a plan with the employer; jointly participating in an apprenticeship program with the employer; or any other similar business practice, does not make joint employer status more or less likely under the Act.
What’s Next?
It should be noted that NPRM is a proposal. The DOL is now soliciting comments from interested parties with respect to the NPRM, and will begin the process of developing a final rule on the subject. Whether the DOL ultimately adopts the rules proposed in the NPRM is unclear. What is clear is that the DOL is focused on clarifying standards with respect to this contentious area of employment law. Morse will continue to monitor, and report on this subject.
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Morse’s Employment Law Group regularly advises clients with respect to compliance with the Fair Labor Standards Act and its developments.
For more information, please contact Amanda Thibodeau or Matthew Mitchell.
U.S. Department of Labor Proposes Significant Changes to FLSA Overtime Regulations
By: Matthew Mitchell
On March 7, 2019, the U.S. Department of Labor announced a long-awaited Notice of Proposed Rulemaking (“NPRM”) that proposes new regulations that relate to overtime and minimum wage exemptions under the Fair Labor Standards Act (“FLSA”). The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked, and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.
Read about the proposed changes, including how they could change employee exempt or nonexempt status in our Employment Law Alert.
Federal Judge Temporarily Blocks New Overtime Rule From Taking Effect On December 1
By: Scott J. Connolly and Sandra E. Kahn
On November 22, a federal judge in Texas issued a preliminary order that temporarily blocks the U.S. Department of Labor (DOL) from implementing changes to the salary basis for white collar overtime exemptions. The new salary rule, which was to become effective on December 1, 2016 would have required employers to increase exempt employees’ minimum salary from $23,660 to $47,476. The preliminary court order blocking the rule appears to apply to all public and private employers nationwide.
Find out how the judge’s order will affect the new salary rule, which was to become effective on December 1. Read this month’s Employment Law Alert.
When Will the Proposed Changes to the Overtime Regulations Be Published?
By: Robert M. Shea
In March 2014, one year ago, President Obama signed a Presidential Memorandum directing the U.S. Secretary of Labor to make changes to the federal overtime regulations concerning the “white collar” exemptions to the overtime requirements. The President directed the Secretary to “restore the common sense principles” to the overtime exemptions.
In May 2014, the U.S. Department of Labor announced a target date of November 2014 for publishing the proposed changes. The Department subsequently engaged in meetings with businesses and employees in which it solicited input and ideas, including on raising the minimum required salary level from its current level of $23,660 and adjusting the primary duties test. The Department did not meet its November 2014 target date and, instead, set a new target date of February 2015. The February date has come and gone without publication of the proposed regulations.
Last week, on March 18, the U.S. Secretary of Labor stated that the Department was “working overtime” on the proposed changes and that he “hoped” they would be published this Spring. Once published, the proposed changes will be subject to public comment and, most likely, substantial modification. Consequently, the final revised regulations will most likely not go into effect until sometime in 2016.
We will keep clients updated on the proposed changes. In the meantime, please feel free to contact the Employment Law team with any questions.
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