WASHINGTON (July 27, 2016) — Expansion of the National Labor Relations Board's (NLRB) joint employer liability doctrine to other federal agencies poses a real danger to franchise operations and other small businesses, according to a new study issued jointly by the U.S. Chamber of Commerce and the International Franchise Association (IFA).
The study, titled Main Street in Jeopardy: The Expanding Joint Employer Threat to Small Business, outlines how various federal, state and local government agencies are adopting the joint liability decision the NLRB issued in August 2015.
The agency handed down the ruling in response to a petition from the International Brotherhood of Teamsters, the IFA said at the time.
Before the ruling, local franchise owners controlled their own hiring practices, working conditions, wages and hours of operation, the association said. Also, the definition of “joint employer” was two or more companies exercising direct operational and supervisory control over an employee, it said.
With the August 2015 ruling, however, the board said it could consider factors unrelated to employees' employment conditions in deciding if joint employer liability applied, according to the IFA.
The NLRB can consider indirect control — or even potential, unexercised control — in making the joint employer designation, it said.
According to the new study, federal agencies such as the Occupational Safety and Health Administration (OSHA) and the Wage and Hour Division said they will to apply the NLRB joint employer liability definition to their own rulings. Many state and local agencies with jurisdiction over employment policy plan to do the same, it said.
“Our report confirms what our members have been telling us all along: The new joint employer standard will reduce employer flexibility and competition at a time when the economy continues to experience anemic economic growth,” said Randy Johnson, senior vice president of labor, immigration and employee benefits at the Chamber of Commerce.
Both the Chamber and the IFA are urging Congress to pass legislation to force the NLRB to abandon its new definition of joint employer liability.