U.S. Chamber of Commerce Asks Congress To Overrule New Joint Employers Test

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06/23/2017

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U.S. Chamber of Commerce Asks Congress To Overrule New Joint Employers Test

By Jacquelyn E. Larson

On June 21, 2016, the U.S. Chamber of Commerce and the International Franchise Association released a report, titled “Main Street In Jeopardy” (the “Report”) asking Congress to overturn the National Labor Relations Board’s (“NLRB” or “Board”) new joint employers test.

As most employers know, the NLRB employed a new sweeping test for finding employers jointly liable in 2015, in a series of cases including Browning-Ferris. The NLRB will now find joint employers where both employers have some indicia of control over terms and conditions of employment, no matter how slight. The Report warns that businesses may now find themselves liable for workplaces they don’t control and workers they don’t employ.

First, the Report states that the motivation behind the rule is obvious: finding deep pockets. Unfortunately, as the Report points out, the new law fails to make sure that an employer was actually involved in an employment relationship with the employee.

The Report warns that this rule will have far-reaching negative results. This includes 1) corporate campaigns against larger businesses who have little to do with the smaller business actually in charge; 2) liability where the employer had little or no control over the employees; 3) an employer having to participate in collective bargaining with businesses over whose day-to-day operations they have no control; and 4) more employers at risk of secondary boycotts.

The Report also notes that WHD, OSHA, and state legislation are also moving toward a broader joint employer standard. This means negative effects could also be felt in 1) small business exemptions to federal and state law, 2) discrimination laws, 3) wage and hour issues, 4) OSHA issues, and 5) Affordable Care Act issues. This has already been felt in California, where companies which use labor contractors are already held jointly liable for wage and hour violations under the California Labor Code.

The Report concludes that the new law endangers creative business models that attempt to be flexible or specialize. “Left unchecked, the new liabilities created by the NLRB, and now other government agencies as well, will be to the detriment of workers, employers, and the economy.”

COUNSEL TO MANAGEMENT:

As previously noted by the Saqui Law Group, the Browning-Ferris decision is bad for employers, exposing them to liability for the employment decisions of other companies over which they have little to no control. This leaves employers with seemingly two choices: stop business arrangements that allow the client company to control your business operations, or actively manage all aspects of employment for any employees working at your facilities or under your corporate umbrella. The reality is that neither of these options is entirely practical in the real world. As a result, companies which are affiliated or work together should increase their efforts to keep their entities separate, particularly with regards to control over employees, and take other steps to minimize the risk of being considered joint employers under the new test. Contact the Saqui Law Group if you have questions about how the Browning-Ferris case can affect your business.

 


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Materials on this newsletter do not constitute legal advice or establish an attorney-client relationship.

 

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