The period for submitting comments to the National Labor Relations Board (NLRB) regarding its proposed joint employer rule closed January 28, over four months after the Board announced its rulemaking. The NLRB had initially provided 60 days, until November 13, 2018, for public comments on its proposal, but in an unusual move it extended the deadline three separate times. Throughout that time, the NLRB received a considerable response of approximately 27,000 comments from the public, including from the U.S. Chamber and other trade associations.
The NLRB’s rulemaking is the result of a nearly four year effort to reverse the ill effects of the Obama-era Board’s errant reasoning in its 2015 Browning-Ferris Industries (BFI) decision, which abandoned a clear test to determine joint employment in favor of an amorphous and expansive one. The decision established a sweeping standard based on “indirect” control or even the “potential” to control — ensnaring all manner of businesses in potential legal liability. Businesses under threat from this policy include many types of franchises, companies that use subcontractors, such as construction, janitorial services, landscaping, accounting, or shipping, and companies that were the major purchaser of goods or services from a particular vendor or supplier.
As the Chamber’s comments observe, that decision “created significant disarray and uncertainty for employers, employees and unions with respect to determining joint employer relationships.” The BFI decision also has had an economic ripple effect as businesses have adjusted their behavior and incurred various expenses as a result of it. According to the Chamber’s senior economist for regulatory analysis, Ron Bird, Ph.D., failure to address the flawed BFI joint employer standard “will have significant adverse impact on the U.S. economy, equivalent to a loss of output of $17.2 billion to $33.3 billion annually for the franchise business sector and likely multiple times that for all sectors affected.”
Moreover, Bird notes, “[t]he adverse impacts that have already been observed since the 2015 NLRB decision will continue and likely become increasingly severe in future years as the effect of the NLRB definition spreads to other jurisdictions and contexts at the federal, state and local levels through administrative rules and litigation outcomes.”
With the comment period now closed, the NLRB will proceed with analyzing the comments and presumably issue a final rule sometime later this year, although it is difficult to predict the exact timeline. Assuming the rule is issued, one hopes that the NLRB will re-establish a bright-line test like the one that had been in place for decades and that the BFI decision so recklessly jettisoned.
When and if that happens, the business community may finally enjoy some stability in determining joint employment so that employers are no longer held responsible for workplaces they don’t control and employees they don’t actually employ.