A coalition of businesses and trade associations, including the U.S. Chamber of Commerce, on February 15 delivered a letter to the entire U.S. Senate encouraging it to pass the Save Local Business Act. That bill would bring a legislative solution to the joint employer issue by defining “joint employer” in the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA). A bipartisan majority in the House of Representatives passed the bill in November 2017, but it has yet to be taken up in the Senate.
As this blog has reported on numerous occasions, the joint employer issue became a significant concern for the business community after the National Labor Relations Board (NLRB) issued its 2015 Browning-Ferris decision that essentially rewrote the so-called “joint-employer” standard.
Under Browning-Ferris, the NLRB overturned decades of precedent and purported to hold businesses liable for the management and treatment of workers they didn’t actually employ or control. The standard extended liability from individual franchises to brand name companies, from subcontractors to larger employers, and potentially even from a vendor or supplier to the company purchasing their products or services. The ruling exposed numerous businesses to increased liabilities and frivolous litigation.
The NLRB’s action in Browning-Ferris was based on the intellectual reasoning of former Wage and Hour Division (WHD) Administrator David Weil. As an academic, Weil wrote extensively about “the fissured workplace” and espoused the idea of holding businesses jointly liable for another party’s employees in business relationships. While in office, Weil issued an “Administrator’s Interpretation” that attempted to use a so-called “economic realities” test to define employment under the FLSA, and the NLRB followed suit under the NLRA using a similar theory in Browning-Ferris.
In December 2017, a short-lived Republican majority at the NLRB reversed the reasoning of Browning-Ferris and found that two employers can only be found to be joint employers if they exercise direct and immediate control over the same employees. However, that action, while helpful, could be overturned by a future Board more inclined to tilt policies in favor of unions, and the intellectual underpinning of the expanded joint employer theory remains.
Moreover, as the coalition letter notes, the joint employer issue is significant under the FLSA as well. To wit, “there are currently as many as eight different federal circuit court definitions for joint employment…. Without a unified national definition, businesses operating in multiple federal circuits will face varying interpretations of what it means to be a joint employer under the FLSA.” Thus, the need for legislation to address this issue still exists.
Fortunately, the bipartisan Save Local Business Act would ameliorate the joint employer issue under both the NLRA and the FLSA by providing certainty for small business owners and other employers. The Workforce Freedom Initiative has consistently called for Congress to act on the joint employer issue, including with the release of a TV advertisement. One hopes the Senate will pass the bill soon and restore balance in this area of the law.