Policy Issues

JOINT EMPLOYER STANDARD

ISSUE

With Browning-Ferris revived, an expanded, vague test – based on “indirect” and “potential” control over workers’ terms and conditions of employment – will replace a more predictable and clear “direct and immediate control” standard for determining joint employer liability.  The decision exposes a broad range of contractors and subcontractors, and franchisors and franchisees, to workplace liability for another employer’s actions and a potential obligation to collectively bargain with workers they have not directly hired. 

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Position

As the NLRB’s action vacating Hy-Brand demonstrates, congressional action could  definitively address the joint employer standard and insulate the issue from whichever party has enough appointees to swing the majority on the highly politicized labor board.  The House of Representatives in November 2017 passed the Save Local Business Act (H.R. 3441), which would codify the “direct and immediate control” standard when deeming employers liable for workplace violations.

A multi-industry coalition, including The Real Estate Roundtable, on Feb. 15 wrote Senate leaders urging them to take up H.R. 3441 as soon as possible to provide certainty for small business owners and other employers in all industries, while clarifying protections for American workers.

 

Background

For approximately 40 years, federal labor policies held that two separate employers are “joint employers” if both have direct and immediate control over employment terms and working conditions (e.g. being responsible for tasks such as hiring and firing, setting work hours, issuing direction to employees, determining compensation and handling day to day record keeping).

  • Obama-era National Labor Relations Board (NLRB) decision in Browning-Ferris: “Parent”-level company liable for employment, workplace conditions controlled by independent contractors and franchise operators who hire “indirect” employees.
  • Nov. 2017: House passes H.R. 3441 along mostly party lines, which would reverse Browning Ferris’s broader joint employer theory.
  • Feb. 2018: Obama-era Browning-Ferris re-instated.  Trump NLRB appointee who provided decisive vote in Hy-Brand should have recused himself because he worked on the case while in private practice.  Politics at NLRB illustrates why Congressional fix remains important.
  • Jan. 2019: D.C. Circuit appeals court largely upholds Obama-era standard, making it an easier path for courts to find an expanded joint employer relationship.

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Duane Duane J. Desiderio 
 Senior Vice President & Counsel

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