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Congress Proposes Legislation to Overturn NLRB Ruling on Joint Employer Liability

  • December 1, 2015

Lawmakers have introduced identical legislation in both chambers of Congress to overturn a landmark decision by the National Labor Relations Board intended to broaden joint employer liability. By including employers who may only indirectly affect employees’ terms and conditions of employment, or have the right to affect such terms and conditions, the controversial Board decision has swept many more businesses under the “joint employer” umbrella and increased labor union bargaining power.

Under the new standard, control of employment terms and conditions can be direct or indirect, such as through an intermediary or through contractual provisions that preserve the right to control, regardless of whether that right is ever exercised.

Prior to the 3-2 ruling in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015), a joint employer relationship existed only where an employer could meaningfully affect matters relating to the employment relationship, such as hiring, firing, discipline, supervision, and direction. The essential element in the new analysis is whether a putative joint employer, under the Board’s elastic analysis, “possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful bargaining.” (For details of the decision, see our article, Labor Board Sets New Standard for Determining Joint Employer Status.) The NLRB ruling overturned three decades of precedent and is expected to immediately affect independent staffing services, subcontractors, distributors, and franchisees.

Shortly after release of the NLRB decision, the Occupational Safety and Health Administration moved to adopt the change for its statutory purposes by directing inspectors to collect information from franchisors and their franchisees to determine whether a joint employer relationship exists for purposes of OSHA liability. Previously, OSHA had indicated it would regard temporary service employers and host employers as joint employers in certain instances.

A concerned Congress quickly introduced bills designed to overturn Browning-Ferris and reinstate the old standard. Introduced in the House on September 9, the Protecting Local Business Opportunity Act, H.R. 3459, would amend the definition of “employer” in the National Labor Relations Act by adding a sentence at the end stating that two or more employers are to be considered joint employers “only if each shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.” Senate Bill 2015 is the counterpart legislation in the Senate.

Both bills are popular on Capitol Hill. As of November 11, the House bill, which was introduced by Education and Workforce Committee Chairman John Kline (R-Minn.), had 108 co-sponsors, including three Democrats. Senator Lamar Alexander (R-Tenn.), Chairman of the Senate Health, Education, Labor and Pensions Committee, introduced the Senate version, which has 48 Republican co-sponsors. The bills are under consideration in their respective committees.

In a joint statement, Alexander and Kline said, “The NLRB’s new joint employer standard would make big businesses bigger and the middle class smaller by discouraging companies from franchising and contracting work to small businesses. Our commonsense proposal would restore policies in place long before the NLRB’s radical decision – the very same policies that served workers, employers, and consumers well for decades.”

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