On June 7, 2017, the DOL's Wage and Hour Division (WHD) announced the withdrawal of its 2015 guidance on independent contractor classification under the FLSA (and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA)), effective immediately. The guidance, Administrator's Interpretation 2015-1, The Application of the Fair Labor Standards Act's "Suffer or Permit" Standard in Identification of Employees Who Are Misclassified as Independent Contractors (Administrator's Interpretation 2015-1), was issued on July 15, 2015 (see Legal Update, DOL Issues Guidance on the Economic Realities Test and Independent Contractor Classification).

The FLSA's minimum wage and overtime pay provisions apply only to "employees," meaning that an employment relationship must exist between a worker and the employer. The FLSA's definition of "employ" includes to "suffer or permit to work," and is widely recognized as the broadest among federal employment laws.

Administrator's Interpretation 2015-1, issued under President Obama, underscored the DOL's long-standing position that workers who are economically dependent on the business of an employer, regardless of their skill level, are employees, and that most workers fall into that category. The guidance also reiterated the six "economic realities" factors the DOL considers when determining if an employment relationship exists and emphasized that no single factor is determinative.

Just as Administrator's Interpretation 2015-1 did not represent a change in the law when issued, its withdrawal is not a substantive change in the DOL's legal position. The guidance simply no longer represents the DOL's position on the FLSA's (and MSPA's) definition of "employ." The DOL's June 7 announcement specifically states that the withdrawal does not change the legal responsibilities of employers under the FLSA. In addition, while the 2015 guidance is no longer on the agency's website, the agency's long-standing six-factor test for employee status is still available (see DOL Fact Sheet #13: Am I an Employee?: Employment Relationship Under the Fair Labor Standards Act (FLSA)).

The withdrawal may signal a change, however, in the focus of the DOL's enforcement efforts. For example, the agency may put less emphasis on the "fissured industry" concept popular with the agency's leadership under President Obama. However, the DOL's enforcement priorities under new Labor Secretary Alexander Acosta are not yet clear.

Employers should not treat the DOL's withdrawal of its 2015 guidance as an excuse to be less vigilant about independent contractor classification. Private litigants asserting misclassification claims in individual and collective actions will continue to plague employers in nearly every industry. Employers should also expect state labor departments to continue their focus on misclassification, both to protect workers and to recoup tax revenue and state unemployment insurance and workers' compensation funds.