The United States Department of Labor (DOL) published an opinion letter that would seem to exempt most so-called “gig economy” companies from federal wage and hour enforcement.
This opinion from the Trump DOL is a reversal of guidance from the Obama DOL stating gig economy workers should considered to be employees.
I think the DOL letter on the gig economy is news worthy, but I question its legal impact on the workplace as a whole. Here is why I would downplay the importance of the opinion letter.
Employees can still bring private causes of action for misclassification — While the letter means that the USDOL won’t initiate enforcement for wage and hour violations against companies, employees can still bring claims. Sure, these claims may get forced into arbitration, but employees through collective action have found ways to work around arbitration clauses.
Appellate courts seem to be giving less deference to agency interpretation – Traditionally courts have granted some deference to the opinions of the executive agencies charged with enforcing the relevant law. The Roberts court seems less inclined to do so. That’s not to say the Roberts court would disagree with classifying gig economy workers as independent contracts on the merits. This just means that federal appellate courts would be less likely to defer to the opinion of the Department of Labor on the issue.
The opinion letter doesn’t apply to state laws – While some states may be persuaded by USDOL opinions on classifying gig economy workers in their wage and hour laws, states are not going to be bound by that opinion — or necessarily even federal statutory law. States also usually have different standards as to is covered by state workers’ compensation laws, state wage and hour laws and unemployment insurance laws.
For example, the Oregon Supreme Court refused to classify a worker as an employee for the purpose of workers’ compensation even though the employe was classified as employees for the purpose of state wage and hour laws. Ohio also refused to use federal law to classify an employee as part of the workforce in order to make them eligible for workers’ compensation benefits.
Opinion letters have much less force than a law – Divided government makes it hard to pass controversial legislation, so interests looking to change the law are stuck trying make changes to the law by lobbying the executive agencies that enforce and interpret those laws. But these favorable opinions don’t have the force of law behind them.
Gig economy companies have also been stymied in state legislatures in their efforts to change employee classfication laws.They are now lobbying state agencies in charge of enforcing and administering state employment laws.
In short, gig economy companies are basically tinkering around employee protection laws at this point. Employee advocates need to be vigilant about the threats to our practices by the gig economy and its high level and bipartisan advocates.