Joint Employer Legislation Introduced | U.S. Chamber of Commerce

Joint Employer Legislation Introduced

On June 27, a bipartisan group of legislators led by Rep. Bradley Byrne (R-AL), Rep. Lou Correa (D-CA), and Rep. Henry Cuellar (D-TX) introduced the “Save Local Business Act (SLBA)” to address the controversial joint employer standard adopted by the National Labor Relations Board (NLRB).  As drafted, the bill would restore a clear and well-understood standard for defining joint employment under the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA). 

The joint employer issue arose when the NLRB issued its 2015 decision in Browning-Ferris, a case in which it redefined who is a “joint employer” under the NLRA.  For the 30 years prior to that decision, two separate business entities had been considered “joint employers” only if both entities exercised direct and immediate control over the terms and conditions of employment of the same workers—meaning that both actually shared the ability to do things such as hire, fire, discipline, supervise, and direct the workers in question. The test announced in Browning Ferris discarded that well-established standard in favor of one in which almost any economic or contractual relationship could trigger a finding of joint employer status.

The legislation introduced today states that:

“a person may be considered a joint employer in relation to an employee only if such person directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment (including hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, and administering employee discipline).”

The proposed legislation also sets forth the same definition of joint employment for the FLSA, which is administered by the Department of Labor’s Wage & Hour Division (WHD). This is an important component of the bill because the intellectual origins of the revised joint employer standard are largely attributable to former WHD director David Weil.  During the Obama administration, Weil issued a so-called “Administrator’s Interpretation” that attempted to broaden how the WHD should interpret and enforce joint employment.  Statutory clarity would prevent the WHD from doing so again.

Since 2015, employers have been calling for a return to a common-sense definition of joint employment.  With introduction of the Save Local Businesses Act, Congress has taken an important first step in doing just that.