Elections have consequences. It is somewhat of a hackneyed phrase, but the fact remains that policy shifts happen when a new administration takes over. In the area of labor and employment policy, the eight years of the Obama administration delivered an avalanche of policies tilted heavily against the business community, and now employers are longing for a shift that will restore a proper balance. Fortunately, one U.S. Department of Labor (DOL) official has signaled that such needed change is on the way.
During a recent conference at Georgetown University, Nicholas Geale, the acting Solicitor General of DOL made some encouraging comments regarding the Trump Administration and how it may handle the joint employer issue. Geale, the acting Solicitor, stated that DOL is going to “listen to the regulated community a little more,” and that the Department needs a “little bit more humility.” That would, indeed, constitute quite a shift from how the Obama Administration handled this issue, which has the potential to affect countless businesses, particularly those involved in franchising and subcontracting.
As observers of labor policy know well, in August 2015 the National Labor Relations Board (NLRB) overturned a decades-long precedent in its Browning-Ferris decision. That case involved joint-employer liability in the context of a contracting relationship, but the Board also launched a case against the McDonald’s Corporation that would expand joint employer liability with respect to franchisor-franchisee relationships. As this blog previously observed, the Browning-Ferris decision has created numerous obstacles for small business owners, not to mention a lot of uncertainty.
The NLRB’s position stemmed from the former Administrator of DOL’s Wage & Hour Division, David Weil. Weil is well-known to observers of labor policy as the author of a book titled “The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It,” in which he spelled out the intellectual theory behind expanded joint employer liability, which he later said “should be defined expansively” and “as broad[ly] as possible.” Between the NLRB and enforcement agencies at DOL, Weil’s joint employer theory started to take root, but Geale’s remarks indicate a possible change under the new administration.
Indeed, Geale observed, “I do believe that the attempt to expand this [joint employer liability] to the franchisee-franchisor relationship is unlikely to be successful, just based on legal precedent. Nor do I think that would be a good use of the solicitor’s resources to attempt to bring those sorts of cases.” While he was careful to avoid making any specific policy pronouncements in deference to the incoming Secretary of Labor, Geale’s statements should give the business community—and franchisors and franchisees in particular—hope that the Obama-era effort to expand joint employer liability has come to an end.