DOL Withdraws Troublesome Guidance on Independent Contractor Classification

Last week, Secretary of Labor Alexander Acosta announced that the U.S. Department of Labor (USDOL) was immediately withdrawing guidance published during the Obama administration that related to independent contractor misclassification and joint employment standards.

The guidance described misclassification a “problematic trend” and sought to limit businesses from classifying employees as independent contractors. In the now withdrawn guidance, the USDOL said that the test to determine whether an individual was misclassified should be applied in a “broad” manner, and, once applied, most individuals would be considered employees. While the guidance did not carry the force of law, it was relied upon by USDOL investigators and courts when examining allegations of wrongdoing, and were often cited by plaintiffs’ attorneys to support their demands.

The guidance, issued by former Secretary of Labor Tom Perez, was among the many regulations identified by IPC members as burdensome, hampering businesses, and in need of reform.

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