Countdown to Extinction: Are these the final days of the NLRB “Joint Employer” standard?

Earlier this month, a bipartisan majority of the U.S. House of Representatives voted to enact the Save Local Business Act (“SLBA”), which would amend the National Labor Relations Act and the Fair Labor Standards Act by providing a more limited definition of “joint employer” liability. If passed by the Senate, the SLBA will roll back the current application of that term under the rule established by the NLRB decision in Browning-Ferris Industries of California, Inc.

For those of us in the franchise industry, the term “joint employer” has been a scolding hot topic for more than two years now, during which virtually every franchise-related conference, convention, symposium, seminar, forum, summit, gathering, assembly, and meeting has included a discussion of how franchise organizations have been impacted by the broad implications of the Browning-Ferris rule. Under the current standard, businesses are exposed to liability not only for workplaces they control directly, but also for those under their indirect control. For lawyers, this broad rule has necessitated painstaking evaluations of proposed policies  and, all too often, recommendations to remove well-intended procedures solely to reduce the risk of exposure. According to the International Franchise Association, this standard unravels 30 years of legal standards and “threaten[s] to dismantle the franchise relationship that has allowed hundreds of thousands of new locally-owned small businesses to open and millions of jobs to be created.”

The SLBA, co-sponsored in the House by Republicans and Democrats, seeks to limit joint employer liability to businesses which exercise actual control over the workplaces associated with them.  The official summary of the bill provides a detailed definition of the troublesome term, stating 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 such as 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, or administering employee discipline.” Supporters of the bill, including House Education and the Workforce Committee Chairwoman Virginia Foxx (R. – N.C.), suggest that the new rule will restore a “common-sense joint-employer standard” by which to measure businesses.

For now, this remains only the first step towards eliminating the broad standard created by the Browning-Ferris rule.  Until the Senate takes its own action on the bill, only time will tell whether the NLRB standard has seen its final days. Stay tuned here for updates as Congress continues to consider this critical question…

David L. Pratt II is a franchise and brand expansion attorney with DL PRATT, PC. Like all posts made on this blog, this posting is solely for informational purposes and is in no way intended to be, or to be interpreted or construed as, legal advice or as creating an attorney-client relationship