Podcast: Why Independent Contracting Is Under Attack

Hosted by: David Weisenfeld

The Department of Labor (DOL) recently established new standards that significantly expand the definition of joint employer under the Fair Labor Standards Act. These standards take a broad view of the employer-employee relationship and continue the agency's narrowing of the definition of independent contractors.

On this podcast, one of the nation's leading authorities on wage and hour laws weighs in on what these joint employer rule changes mean for employers. Tammy McCutchen is a former administrator of the Department of Labor's Wage and Hour Division and is a principal with Littler Mendelson in Washington, DC.

Why Independent Contracting Is Under Attack

March 15, 2016

McCutchen explains that the DOL is taking a broader concept of economic realities with the result that many more business relationships will result in joint employment. "Every word of it is concerning," McCutchen says. She predicts that these new standards will have a big impact and may lead to a decrease in subcontracting and franchising.

"The mom and pop businesses need to be very concerned because the Wal-Marts and IBMs of the world might start having to be hesitant about who they contract with," says McCutchen. "If they're going to end up paying the bill, they're not going to want to contract with small businesses who either don't have enough assets to pay or have bad practices."

As a result, McCutchen recommends that employers do more vetting of new contractors and franchisees, particularly about their litigation and enforcement history. She also advises that companies review their contracts and ensure that they have broad indemnification clauses stating that the subcontractor will be responsible for violations involving their own employees and independent contractors.

Additional Resources

Joint Employment Is the Focus of DOL's Latest Interpretation

Most Workers Are Employees, Not Independent Contractors, Says DOL

Podcast: NLRB's Landmark Joint Employer Ruling Has Big Implications