House Committee Examines Joint Employer

The House Education and Workforce Committee held a hearing on July 12 to examine the murky joint employer standard that has generated much uncertainty in the employment community. The Coalition to Save Local Businesses, of which NATSO is an active member, submitted testimony to the Committee urging Congress to pass legislation clarifying the joint employer standard in a manner that will protect employees while enabling small businesses to avoid legal uncertainties and litigation.
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In an August 2015 decision known as "Browning Ferris," the NLRB dramatically changed when a company may be held liable for labor violations by other employers they contracted with, ruling that by merely exercising indirect control or possessing unexercised potential control over work conditions, one could be a joint employer. 
 
Importantly for NATSO members, a company deemed a joint employer would also assume bargaining responsibilities if the other employer was unionized. The International Franchise Association (IFA) has argued that this 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.
 
The revised, Obama-Administration joint employer standard has potentially dramatic consequences for NATSO members.  Beyond the franchisor-franchisee context, which is ubiquitous in the travel plaza industry, 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 indicia of a joint employer relationship.
 
At the July 12 hearing, a FedEx Ground executive testified that FedEx has a vested interest in this issue because its operating companies contract with a multitude of national, regional, and local vendors. "Beyond FedEx, it's hard to identify a business that does not contract with another company as a supplier or customer," said Richard Heiser, vice president of FedEx Ground.
 
The Coalition to Save Local Businesses, of which NATSO is an active member, testified that "the question of when an employer should be held liable as a joint employer is an unsettled question of law, and Congress should settle it."  NATSO expressed a similar sentiment in testimony submitted to the House Education and Workforce Committee earlier this year, saying that the current level of uncertainty "creates a risky and undesirable business environment for NATSO members.  Unless much-needed certainty and stability comes soon, the consequences will be real and harmful."
 
On the other side of the issue, a representative of the National Employment Law Project argued that the revised, Obama-era joint employer standard reflects changes in business practices, and only large employers such as McDonald's will be affected.  
 
Republicans are expected to introduce in the coming weeks legislation codifying the previous, long-standing joint employer standard requiring employers to actually exercise control over contracted workers before triggering joint employer liability.
 
On July 13, a Senate committee will consider the nominations of President Trump's nominees for the two open seats of the NLRB.  The nominees, lawyers Marvin Kaplan and William Emanuel, would give the board a Republican majority (3-2) for the first time since President George W. Bush's Administration.  This could allow the Board to overturn the new joint employer standard, though such a change would not be immediate and could later be overturned as current Board members are replaced.

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