Trump Administration Withdraws Guidance to Protect Workers

Trump won the White House by invading the traditional Democratic base – working Americans – promising them greater wages and job security. Renegotiated treaties, clamping down on job exporters, investing in infrastructure-related job creation – these were just a few of his signature promises that attracted the working class Wisconsin, Pennsylvania, and Michigan voters who made President Trump.

Now that Trump is in office, he is singing a different tune – the same old, Republican tune that is only music to the ears of the richest Americans (like Trump and his family). This week, the Trump administration announced that his Department of Labor (DOL) has withdrawn Obama-era administrative guidance which made it more difficult for employers to avoid their responsibilities to workers.

The 2015 guidance adopted an expansive definition of employment under the Fair Labor Standards Act (FLSA) so that most workers would be covered employees, not misclassified as independent contractors. It specifically abandoned the “common law control” test, which focuses on the employer’s control over the employee, in favor of the broader “economic realities” test, which focuses on an employee’s economic dependence on the employer. As a result, most workers were covered under the FLSA and had access to important protections including minimum wages, overtime pay, worker’s compensation, and unemployment insurance.

The Obama administration issued additional guidance in 2016 for joint employers. It broadly defined the scope of joint employment, making it harder for corporations to play a shell game with workers who are just trying to get their hard-earned pay. It specifically required joint employers to aggregate the total hours employees worked for joint employers. Joint employers could no longer claim that an employee worked for Company A for 30 hours per week and Company B for 25 hours per, just to avoid paying her overtime each pay period. Instead, the employee was entitled to receive 15 hours overtime as she actually worked 55 hours per week for the joint employer.

Misclassification affects 10-20 percent of employees and costs them – and states –  hundreds of millions of dollars in unpaid wages and taxes. It affects workers in every industry, from domestic workers to truck drivers. Recent court cases highlight the pervasiveness of misclassification. FedEx settled for $228 million dollars after the Ninth Circuit found that 2,300 delivery drivers had been misclassified as independent contractors. Lyft is paying up $27 million to settle misclassification claims. The Obama administration’s guidance was an essential step to combat this massive problem and protect all workers.  

Withdrawing the guidance will affect middle-class people nationwide. The DOL has now signaled that employee misclassification will no longer be a priority. Employers will again more easily be able to misclassify employees as independent contractors, to avoid paying workers properly and protecting their safety and health. It will also be more difficult to establish a joint employer relationship, and therefore to hold all the involved parties responsible, where workers’ rights are violated. Big corporations love the Trump administration’s withdrawal of the Obama-era guidance – it puts more money in the executives’ pockets, at the expense of their workers.

Moving forward, workers and employment attorneys should pay attention to whether and how DOL enforces misclassification cases and who Trump appoints to the two open spots on the National Labor Relations Board (NLRB). In a 3-2 decision, the Obama-era NLRB adopted the broad interpretation of joint employer. If the DOL does not aggressively enforce misclassification cases, and the NLRB returns to a narrow interpretation of which companies are responsible to workers, everyone will begin to feel the effects of Trump’s abandonment of American workers.