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Employment Blog

Recent action by the Trump Administration has raised a new question regarding joint employer status and whether particular employees hired (individually or through a company) to provide work for another company should be considered an employee of the hiring company.  The past Department of Labor issued various memos that indicated a crackdown on independent contractor status and projected that many situations where a company hires another company to provide workers would actually result in both companies being considered joint employers of the workers.  Many companies sought protection by claiming these workers were only employees of the hired company or were independent contractors and therefore not under the control or jurisdiction of the hiring company.  The directives from the Obama Administration caused a number of companies to scurry to determine whether or not they would be potentially liable for various employment matters or decisions because of the joint employer status.

The withdrawal of this guidance does not necessarily change the law but does change the anticipated focus of Department of Labor investigations.  Companies can continue to hire individuals who would qualify as independent contractors or hire a company that would provide workers.  There will still be questions whether the workers are actually employees of the hiring company, especially if the claim is that the workers are each individual independent contractors providing some particular type of service to the hiring company.  The law regarding independent contractor status has not changed but whether it will be the topic of aggressive enforcement now needs to be determined.

Employers should not breathe too easy nor go out of their way to risk a particular worker being considered an independent contractor or an actual employee of the company.  There is still potential liability if an individual worker is declared an independent contractor but actually qualifies as an employee of the company.  The company may be responsible for income tax withholdings, worker’s compensation coverage and other types of benefits if the employee is misclassified as an independent contractor and actually qualifies as an employee.  Employers should be careful but at least will be given a fair chance to show an individual is not an employee of the company.