Washington, D.C., USA : Late Thursday, the National Labor Relations Board, NLRB, – which only gained a Republican majority with President Trump’s appointees in September – overturned a key Obama-era precedent, the joint-employer decision from 2015, that gave workers significant leverage in challenging companies like fast-food and hotel chains over labor practices.
NLRB recently experienced a major shift under President Trump, who came into office with two vacancies to fill. The board voted 3-to-2, along party lines, with Trump’s newly minted members Marvin Kaplan and William Emanuel siding with outgoing board Chairman Philip Miscimarra, whose term expires on Sunday at midnight, while Democratic members Mark Gaston Pearce and Lauren McFerran dissented.
The vote restores the pre-2015 standard, which deemed a fast-food corporation a joint employer only if it exercised direct and immediate control over workers at the franchise, and in a way that was not limited.
Today’s ruling effectively changes the standard for holding a company responsible for labor law violations that occur at another company, like a contractor or franchisee, with which it has a relationship.
The doctrine also governs whether such a corporation would have to bargain with workers at a franchise if they unionized, or whether only the owners of the franchise would have to do so.
In the decision, the Republican controlled board overruled the board’s previous 2015 decision in a case, known as Browning-Ferris, which found a company to be considered a joint-employer with a subcontractor if it has “indirect” control over the terms and conditions of employment or has the “reserved authority to do so.”
In a statement, NLRB said in all future and pending cases two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised direct and immediate control over essential employment terms of another entity’s employees.
Accordingly, under the pre–Browning Ferris standard restored today, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship. The Board majority concluded that the reinstated standard adheres to the common law and is supported by the NLRA’s policy of promoting stability and predictability in bargaining relationships.
Republicans and business groups have long fought the ruling, claiming it blurred the lines of responsibility in disputes over working conditions, wages and work.
The House passed legislation last month offered by Rep. Bradley Byrne (R-Ala.) to reverse the ruling and permanently change the definition of an “employer” in the NLRA and the Fair Labor Standards Act.
In its decision Thursday, the board called the standard created by Browning-Ferris “a distortion of common law” that prevents the board from “discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.”
The case challenged a previous ruling that found a contractor to be a joint-employer with a construction company. The board said it agreed with the judge that the companies were joint employers, but we disagreed with the legal standard the judge applied to reach that finding.
The National Restaurant Association, which feared the 2015 ruling threatened the franchisee model, hailed the board for its decision.
“The 2015 Browning-Ferris ruling stacked the deck against small businesses and inserted uncertainty into day to day operations,” Cicely Simpson, the group’s executive vice president of public affairs, said in a statement.
“Today’s decision restores years of established law and brings back clarity for restaurants and small businesses across the country.”