House Narrows NLRB Joint Employer Standard

NOVEMBER 8, 2017

The House passed the “Save Local Business Act” this week that, if enacted, would prohibit the National Labor Relations Board (NLRB) from implementing its vastly expanded “joint employer” standard. The NLRB’s rule, issued during the Obama administration, amended and increased the circumstances under which an employer could be held liable for workplace violations by another business. Eight Democrats voted with the Republicans to pass the legislation.

The NLRB’s prior joint employer standard required one business to have “direct control” over the workplace policies of the second business. The NLRB expanded the standard in the 2015 case Browning Ferris to a vaguer “indirect control” test. Since 2015, the NLRB has brought cases under the new standard, including against McDonald's Corporation, arguing it is responsible for actions by its franchises.

The House-passed bill changes the National Labor Relations Act and the Fair Labor Standards Act to state that a company is only considered a joint employer if it “directly, actually and immediately” has control over essential terms and conditions of employment.

During the floor debate on the measure, Republicans said that the NLRB’s overreach threatened to hurt the economy, especially by forcing corporations that franchise to cut back on their brands. Business groups also argued the joint employer rule would affect businesses that had contractors working on their worksites.

Rep. Virginia Foxx (R-NC), chairwoman of the House Education and Workforce Committee, said, “The legislation simply restores a common-sense joint employer standard. And it does so in a way that upholds vital worker protections and ensures all employers know their responsibilities to their employees.”

The majority of Democrats opposed the legislation, contending the measure would hurt workers' rights. Rep. Bobby Scott (D-VA) said that the Republicans’ measure provides no guidance as to how many of the nine essential terms and conditions of employment in the existing federal statutes an employer must control to be considered a joint-employer.

The legislation’s status in the Senate is uncertain, in part, because the House measure was not passed with broad bipartisan support. The measure in the House had 123 co-sponsors, including three Democrats.