In 2015, the Obama NLRB expanded the definition of a “joint employer,” which is used to determine when a business should be considered responsible for the labor practices of another. Joint employers are responsible for bargaining with any union representing the jointly employed workers and share liability for violations of the National Labor Relations Act. It is therefore a very complex relationship when established.
The changes by the Obama Board disrupted decades of established labor law and undermined the relationships between a brand company and local franchise business owners, contractors and subcontractors, and businesses and suppliers and vendors – all of which have created millions of jobs and allowed hundreds of thousands of individuals to achieve the American Dream of owning their own small business.
Under the prior standard, the Board considered an entity to be a joint employer if it exercised direct and immediate control over another business’s employees, including having the ability to hire, fire, discipline, supervise, or direct an individual. Two entities were joint employers only when they shared that direct control over the essential terms and conditions of employment for the same employees.
On August 27, 2015, however, the Board issued its decision in Browning Ferris Industries expanding the standard to include indirect or even unexercised potential control over the terms and conditions of employment, drastically expanding the number of relationships that could come under the new standard. As noted by the Board’s two dissenting members, this new rule will “subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential liability for unfair labor practices and breaches of collective bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts and picketing.” Additionally, since Browning-Ferris was issued, the Department of Labor has also pursued a looser joint employer standard under other federal labor laws, including the Fair Labor Standards Act, and issued a sweeping 2016 guidance significantly compounding the uncertainty created by the Board.
The new Congress, President and NLRB must move immediately to reestablish the previous joint employer standard in order to protect vitally important business relationships that create jobs, strengthen the American economy, and provide avenues for the American Dream.
Please see our resources page for more information on this issue.