On Friday, the National Labor Relations Board will publish a Notice of Proposed Rulemaking in the Federal Register regarding its joint-employer standard, a policy that will particularly affect franchise owners.
Under the proposed rule, an employer may be found to be a joint-employer of another employer’s employees only if the employer possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine.
Those terms and conditions of employment include hiring, firing, discipline, supervision, and direction.
Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.
“Rulemaking in this important area of the law would foster predictability, consistency, and stability in the determination of joint-employer status,” the NLRB said in a statement. The goal, it says, is a “joint-employer doctrine that does not draw third parties, who have not played an active role in deciding wages, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another employer’s employees.”
Public comments are invited on all aspects of the proposed rule and should be submitted within 60 days of the Notice’s publication in the Federal Register, either electronically to http://www.regulations.gov, by mail or hand-delivery to Roxanne Rothschild, Deputy Executive Secretary, National Labor Relations Board, 1015 Half Street S.E., Washington, D.C. 20570-0001.
Among those praising plans for a rule proposal was U.S. Chamber of Commerce Senior Vice President for Employment Policy Glenn Spencer. “The Chamber has been calling for a reversal of the unworkable, sweeping joint-employer standard issued under the previous administration, which sought to make employers liable for workplaces they don’t control and workers they don’t employ,” he said in a statement. “We applaud the NLRB for taking this critical step toward repairing the damage from this policy and giving employers the certainty they need to get back to creating jobs for American workers.”
In a 3-2 decision in December 2017, the Board overruled its 2015 decision related to Browning-Ferris Industries, which could make joint-employer rules less onerous and complex.
It declared Browning-Ferris Industries, a California-based recycling company, to be a “joint employer” with Leadpoint, a staffing services company. The decision, critics say, ignored more than 30 years of regulatory and legal precedent and retroactively adopted a far broader definition of “joint employer” than had ever been contemplated.
The ruling covered every company that contracts out for services rendered by those who are not the company’s own employees. The headquarters of a fast food chain, for example, could be held liable for the unfair labor practices of an otherwise independent franchisee.
Under Hy-Brand, it became significantly less likely that the typical franchisor-franchisee relationship will result in being considered joint employers, as they would under the BFI standards.