DOL And NLRB Memorandum Of Understanding (MOU) May Cause Employer Headaches – Employment and HR

Betty Q. Hixson


United States:

DOL And NLRB Memorandum Of Understanding (MOU) May Cause Employer Headaches


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On January 6, 2022, the U.S. Department of Labor’s Wage and
Hour Division (DOL/WHD) and the National Labor Relations Board
(NLRB) announced a memorandum of understanding (MOU) between
the agencies to share information, collaborate, and coordinate on
investigations of potential violations of federal labor and
employment laws. The MOU places particular emphasis on worker
misclassification (both independent contractor and joint-employment
relationships) and retaliation and represents the latest in the
Biden administration’s efforts to ramp up enforcement in these
areas.

The MOU will take effect immediately, with the DOL/WHD
announcing that it was reviewing cases currently under
investigation that may have some overlap with the NLRB.

Based on the MOU unveiled today, employers may see the
following:

Workers Referred Between DOL/WHD and NLRB

The agencies agreed to create a formal referral process,
including advising workers of potential violations of laws enforced
by the other agency and providing workers with both information
about and a contact at the other agency.

DOL/WHD and NLRB Sharing Information and Data

The agencies agreed to create a system to exchange information
and data across the two agencies. This includes sharing
confidential information and data not otherwise subject to
production to the public, such as the identity of individuals
providing information during an investigation; internal opinions,
memoranda, or recommendations of investigators; information covered
by attorney-client privilege or work product; protected personal
information; and, confidential business information and trade
secrets.

Joint or Coordinated Investigations

The MOU calls for joint or coordinated investigations between
the DOL/WHD and NLRB when matters fall within the agencies’
jurisdictions. The MOU instructs that if the agencies find
overlapping statutory violations, they should consider conducting a
single investigation in abeyance while one agency advances the
matter based on the statute under which “it would be most
feasible and practical to proceed.” This presents a scenario
where an employer could resolve a matter with one agency only to
learn that the other agency is waiting in the wings.

Increased Scrutiny of Employment Relationships and
Structures

Not only does the MOU indicate that the agencies will target
employers that misclassify individuals as independent contractors
as a part of their business models, the MOU also indicates an
intent to closely scrutinize organizations with “complex or
fissured employment structures,” including “joint
employer, alter ego, and business models designed to evade legal
accountability.” In short, companies that use independent
contractors will be heavily scrutinized.

In connection with the MOU, the DOL/WHD and NLRB will be holding
joint training sessions for their field staff and will team up on
outreach and education efforts involving worker classification
issues and labor law violations.

Key Takeaways

Information-sharing agreements such as the one entered into
between the DOL/WHD and NLRB are certainly not new. In 2011, the
IRS and DOL entered into a similar MOU as part of a joint worker
misclassification initiative. That MOU came under fire publicly in
2018 in a report issued by the U.S. Treasury Inspector General for
Tax Administration, which criticized the IRS for not effectively
implementing the 2011 misclassification MOU.

Given the current landscape, it is easy to see how the new MOU
between the DOL/WHD and NLRB may be more successful in cracking
down on alternative workforce arrangements and not suffer the same
fate. David Weil, a public opponent of independent contractor
relationships, has been nominated to head the DOL/WHD. In addition,
the NLRB recently invited the parties and amici in The
Atlanta Opera, Inc.
 case to submit briefs addressing
whether the NLRB should reconsider its standard for determining
independent contractor status. The tide in this area will continue
to turn.

Companies that use independent contractors or alternative
workplace arrangements may want to consider monitoring these
developments and auditing their own worker classifications to
minimize the ever-growing risks in this area, to the extent
possible.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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