A ruling by the National Labor Relations Board to relax the legal standard for deciding when a company jointly employs another company’s workers is a major step towards overturning the employer-friendly rule established under the administration. Trump.
The looser standard proposed Tuesday could mean legal exposure for national franchise companies such as 7-Eleven Inc.,
The NLRB proposed rule would expand the factors that can establish a joint employment relationship to include indirect and unexercised control over the terms of an employment. Companies would be considered co-employers if they co-determine “essential terms of employment,” such as hours, wages, and benefits. It would undo the Trump-era joint-employer rule that took effect in April 2020, which broke the tradition of shaping policy by board decision in an individual case.
“We believe there is little reason or need to update the current policy, but any reasons to change this policy are purely ideological,” said Michael Layman, lobbyist for the International Franchise Association.
Co-employers share responsibility for unfair labor practices and responsibility for bargaining with a union, making the NLRB’s legal test for joint employment one of the most hotly contested issues in federal labor law over the past of the last decade. The policy itself has wavered depending on the majority party, with Republicans favoring a more business-friendly standard and Democrats seeking to crack down on employers seeking to shift blame for alleged abuses.
“In an economy where labor relations are increasingly complex, the Board must ensure that its legal rules for deciding which employers should engage in collective bargaining serve the purposes of national labor relations law. “, NLRB President Lauren McFerran said in a statement.
The possibility of extending labor law obligations to all businesses is a concern in the franchising industry and for businesses seeking labor through contracts, temporary staffing and other arrangements. business-to-business.
“A company could be forced to bargain collectively or otherwise deal with a union that does not represent its own employees, lose protections against union picketing by neutral employers, and share responsibility for labor and employment violations committed by a other business,” Kurt G. Larkin, a partner at management firm Hunton Andrews Kurth, said in an email.
Layman criticized two board members, Gwynne Wilcox and David Prouty, who were previously attorneys for the Service Employees International Union. The union sought to overturn the Trump-era rule in court.
“This is one of their first actions where they’re using the government to push their former employer’s agenda at the expense of small businesses across the country,” Layman said.
Joint employment could also play a crucial role in the brewing legal battle over whether college student athletes qualify as employees with employment law rights. The NLRB only has jurisdiction over private employers, but the agency is investigating a case that could lead to allegations that private sports conferences jointly employ student athletes at public universities.
The NLRB will seek public comment on its joint employer proposal before finalizing the rule.
The US Department of Labor is considering a similar rule under the Fair Labor Standards Act, which regulates wages, overtime and other aspects of employment. The Biden administration has successfully rolled back a Trump-era FLSA rule, but has not offered a replacement.