Groups fight NLRB's redefining joint employer liability doctrine

WASHINGTON (Aug. 16, 2016) — Organizations such as the U.S. Chamber of Commerce and the International Franchise Association (IFA) are seeking congressional action to combat the National Labor Relations Board's (NLRB) redefinition of the joint employer liability doctrine.

Expansion of the NLRB's August 2015 joint employer liability ruling doctrine to other federal agencies poses a real danger to franchise operations and other small businesses, according to the Chamber and the IFA.

“What started as an obscure labor law issue has become a small business and jobs issue as federal, state and local government agencies get in on the act,” said IFA President and CEO Robert Cresanti.

“This undermines the independence of small business franchise owners and creates a significant threat and cost to businesses in numerous industries beyond just franchising.”

The NLRB 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.

The IFA and the Chamber outlined the dangers of the new joint liability doctrine in a study titled, “Main Street in Jeopardy: The Expanding Joint Employer Threat to Small Business.”

According to that study, federal agencies such as the Occupational Safety and Health Administration (OSHA) and the Wage and Hour Division said they will 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.

The decision came down as part of a case involving the former Browning-Ferris Industries (BFI), based in Houston, according to the report. (The company was sold to Allied Industries, together with private equity firms Blackstone Group and Apollo Management, in 1999. BFI was dissolved in 2000 by Allied Waste.)

“Despite the board's assurance that it had merely ‘refined' its standard for determining joint employment under the NLRA (National Labor Relations Act) using ‘long-established principles,' employers knew that the decision represented a significant policy change with potentially serious economic consequences,” the report said.

By replacing the traditional standard of those businesses that have direct control over employees to a vague standard allowing considerations of ‘indirect' or ‘potential' control, employers were suddenly responsible for workplaces they don't control and workers they don't employ, according to the report.

“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. There are a number of bills before Congress that would do just that, according to an IFA spokesman.

An IFA-led effort called the “Coalition to Save Local Businesses” is calling on small business and the public to support S. 2015/H.R. 3459 —the Protecting Local Business Opportunity Act — which would overturn the NLRB joint liability doctrine and require a joint liability definition based on actual, direct control.

“The joint employer changes adopted by the NLRB threaten the livelihoods of nearly every small business,” said a coalition press release in support of the Protecting Local Business Opportunity Act.

“The NLRB has made it far more difficult for independent business owners to build sustainable, profitable local businesses, and the BFI decision will lead to large corporations dominating Main Street,” it said.

There also is a provision in the House Appropriations Committee's Fiscal Year 2017 appropriations bill for the Departments of Labor and Health and Human Services, the IFA said. NLRB funding is included in this bill, and it specifically forbids the agency from enforcing the new joint liability definition.

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