House Passes Bill Limiting Joint Employer Liability

The U.S. House of Representatives on Nov. 7 voted 242-181 in favor of the Save Local Business Act (H.R. 3441) which, if enacted, would redefine the definition of joint employer under the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA).

The legislation, which NATSO supports as an active member of the Coalition to Save Local Businesses and was an issue on which NATSO members lobbied at the 2016 NATSO Day on the Hill, would clarify that two or more employers must have direct control over employees to be considered "joint employers."

The measure will be difficult to pass in the Senate in light of the need for a filibuster-proof 60-vote threshold as well as many Democrats’ opposition to the legislation.

However, with the National Labor Relations Board (NLRB) now comprised of a majority of Republican appointees for the first time since the George W. Bush Administration, it’s possible the NLRB could overturn some of the decisions from the Obama Administration’s Labor Board. Recently, the Senate also approved Peter Robb, a long-time management side labor lawyer, as the General Counsel of the NLRB.

The business community has grappled with uncertainty about the definition of joint employer since 2015, when the NLRB ruled in a decision known as "Browning Ferris" that by merely exercising indirect control or possessing unexercised potential control over work conditions one could be a joint employer.

This decision dramatically changed when a company may be held liable for labor violations by other employers they contracted with. Under that ruling, a company deemed a joint employer also would assume bargaining responsibilities if the other employer was unionized, which the International Franchise Association (IFA) has argued could crush the franchisee-franchisor relationship. Previously, a company only established a joint employer relationship when they directly controlled the essential terms and conditions of employment of another company with which they contracted.

Since 2015, businesses have been confused because of the unpredictable joint employer liability yet have faced higher operational and legal costs, decreased business values, less compliance assistance, less growth and fewer opportunities to create jobs.

These issues are of specific concern to the truckstop and travel plaza industry, where the franchisor-franchisee relationships are ubiquitous. Furthermore, NATSO members work with a variety of contract workers such as equipment inspectors and fuel delivery personnel. The nature of this work is such that NATSO members may provide detailed instructions as to how equipment must be inspected to ensure that there are no substance leaks, or when fuel must be delivered to minimize disruptions and potential dangers. An expanded joint employer standard therefore could penalize truckstop owners by viewing these work requirements as indicative of a joint employer relationship.

NATSO members may access a detailed analysis of the NLRB’s effort to revise the joint employer standard, and the Department of Labor’s guidance on independent contractors, including a discussion of the potential affect this could have on NATSO members. Click here to access NATSO’s Joint Employer Standard and Compliance Guide for Truckstops and Travel Plazas.


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