By Thomas Franz
BridgeTower Media Newswires
DETROIT-A Grand Rapids employment attorney has said that following a recent announcement from the U.S. Department of Labor, there are signs that the new presidential administration will create more pro-business policies.
Kurt M. Graham of Mika Myers PLC explained that an early June rescinding of 2015 and 2016 administrator interpretations signals a shift in philosophies from the previous administration.
The interpretations that were rescinded dealt with how the DOL would enforce the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act.
"Essentially, they rescinded those (interpretations of the laws), which essentially means we're going to what the law was prior to these two interpretations being issued in 2015 and 2016." Graham said. "It's going to be a benefit to employers by going back to the old rules."
The 2015-16 interpretations
Graham said the 2015 interpretation brought about a change in enforcement emphasis.
In July 2015, Graham said the DOL looked at whether individuals should be classified as employees. If they were, they would be covered by the FLSA, entitled to overtime pay and can sue employers for violations.
The other classification analyzed was whether that person was an independent contractor, and if so, they wouldn't have rights as an employee to sue or get overtime because they're not an actual employee.
"The DOL said that if an employer uses a temp agency or contracted with an individual, the DOL said that most workers, as we view it, are going to be viewed as employees under the FLSA definition of employee," Graham said. "A lot of employers do that to minimize payroll costs and just minimize potential liability of getting sued. The DOL said they would review those relationships and contracts, and their assumption was there's an employment relationship unless the employer can prove otherwise."
The second interpretation came in January 2016, and focused on whether someone was a joint employer, Graham said.
"That means you can have two businesses employing someone at the same time," Graham said. "The problem there was that the employer that contracted with this staffing employee could be viewed as the employer and could be sued or could be responsible for paying overtime and payroll taxes."
Graham said employers then had to evaluate if they should continue those relationships despite more governmental oversight in order to minimize liability from joint employment relationships.
What's old is new
Graham said that with a Republican presidential administration in place, rescinding interpretations like these will be common.
"I think they're really going to relax in terms of, OK, we're going to say how much direct control the employer has over this person they're contracting for," Graham said. "The DOL now looks at these and says we're not going to enforce the law that way. We're not going to really scrutinize as much as the DOL was in 2015 and 2016."
Bruce A. Miller, an attorney with Miller Cohen PLC in Detroit, frequently works on behalf of workers and unions.
Miller said the rescinding of the interpretations will return the work environment back to the way it was prior to 2015.
"The DOL tried to correct this situation by making the definition of employee more inclusive and more definite," Miller said. "These changes return us to the status quo, which means employers will be able to play games defining workers in a way that takes them out of the act's coverage."
Effects of changes
Looking ahead, Graham predicts that companies will be more inclined to have relationships with temporary workers in order to keep costs down because a lot of the administrative costs for using such workers will be placed on staffing agencies.
"There's a far less likelihood of getting sued because an individual needs to be an employee to have a right to sue under the FLSA," Graham said. "It's going to be cheaper to do business with these employees and it's going to be a less risk of liability as well, so those relationships should have less red flags now for employers as they go on."
Miller added that the new rules will lessen the number of workers covered by the FLSA because more workers will be classified as independent contractors.
"Independent contractors are not covered by the FLSA. That means the employer is not required to pay a minimum wage and they're not required to pay time-and-a-half after 40 hours," Miller said. "The new rule doesn't repeal the FLSA. What this does affect is who is covered by the act and will get the benefits of it."
Miller and Graham each said that there could be an increase of workers hiring attorneys for legal battles due to the changes.
"The fact that an employer defines somebody as an independent contractor doesn't make it so. Employees who find that they have been described as employees and are now being redefined as independent contractors should contact an employment lawyer to make sure that they're not being mistreated," Miller said.
Graham said workers may hire their own attorneys more frequently because the DOL could have less willingness to file complaints on workers' behalf.
"There's going to be a higher burden for them to get the DOL involved," Graham said. "What you may end up seeing is employees going to attorneys more and more. Whether that helps plaintiffs in the long run remains to be seen, but the standard of proof that proves a violation now is a little bit tougher because of the higher threshold."
On the employer side, Graham said businesses still have to make sure they're following laws such as the FLSA, but the rescinding of the interpretations will make it easier to do business.
"It's not as if they're withdrawing all of these rules altogether, we're just going back to the way it was prior to 2015," Graham said. "I'm telling my employer clients that they're not in the free and clear yet. You need to make sure you're still following the rules that are in place now to avoid that risk."
Published: Tue, Jul 11, 2017
