As the current Administration winds down (and in absence of support in Congress to go after employers), the USDOL WHD is launching two high-impact strikes against employer business models. The first one – amendments to FLSA white-collar exemption regulations – we’ve known about for over a year as the APA regulatory process has unfolded. On Friday, WHD Administrator David Weil confirmed that the proposed regulations will be disclosed “very soon” (when the White House OMB finishes its review). The second one, however, is coming out of left field. Administrator Weil announced during a speech on June 5 that WHD will soon be issuing new “guidance” on independent contractor status via an “Administrator Interpretation.” WHD is taking advantage of the opportunity blessed by a recent, unanimous U.S. Supreme Court holding that WHD’s issuance of an “Administrator’s Interpretation” reversing its prior position regarding the exempt status of mortgage loan officers was valid even though it did not go through the notice-and-comment APA rule-making process.
Administrator Weil refused to comment on the specifics of the soon-to-be-issued AI on independent contractors saying only that it would be a “holistic,” rather than “mechanical,” test, which is generally a code word for a “totality of the circumstances” approach that will make the application of the distinction between independent contractors and employees subjective and fraught with risk for employers, particularly those whose business models depend on engaging numerous small contractors and freelancers to regularly perform personal service. According to Weil, the AI is targeted to be released in early Summer.
Michael J. Killeen, Davis Wright Tremaine LLP