NATSO urged Congress to restore the joint employer standard under the National Labor Relations Act (NLRA) to the “efficient” and “effective” rule that had been in place for more than 30 years prior to the National Labor Relations Board’s controversial August decision in its case against Browning-Ferris Industries (BFI) that redefined and expanded "joint employer” liability.
In comments submitted March 22 to the House Small Business Committee, NATSO said the new joint employer standard, which makes it easier for two or more companies to be declared joint employers, will expose companies to more legal liability for how their subcontractors, staffing agencies and franchisees treat their employees as well as make businesses more susceptible to workforce unionization by imposing new collective bargaining obligations.
NATSO further highlighted that NLRB’s new joint employer standard is reflective of a larger trend in the executive branch to expand the scope of individuals for whom employers are responsible for benefits.
The joint employer standard has been mired in controversy since the NLRB issued its decision, with many Republicans and business leaders arguing that the new standard will inhibit the ability of businesses to thrive by creating an immense liability burden.
A group of 73 Republican lawmakers on March 23 urged Representatives Tom Cole (R-Okla.) and Rosa DeLauro (D-Conn.), the Chairman and Ranking Member of the House Subcommittee on Labor Health and Human Services, to restore the long-standing joint employer standard in its fiscal 2017 appropriations bill.
The NRLB’s long-standing joint-employer standard required that control over another entity’s employees must be “direct and immediate” in order for joint employment to exist. This enabled truckstops and travel plazas to enter into a variety of business relationships without being held responsible for another entity’s employees.
The new standard considers two or more businesses to be joint employers if they share or codetermine those matters governing the “essential terms and conditions of employment.” The NLRB no longer requires that a joint employer exercise the authority to control employees’ terms and conditions of employment, but simply possessing or potentially possessing that authority may be sufficient for a joint employer status.
With little official guidance to help truckstops determine whether they may be joint employers, this new standard creates a high level of uncertainty in determining whether a truckstop or travel plaza is a joint employer with other entities with whom it has contractual relationships.
Some companies, fearing that they will be considered joint employers with all of their contractors or franchisees, may decide to exert more control over those entities, resulting in high administrative costs and inefficient employee time usage. Other companies, meanwhile, may try to avoid joint employer relationships altogether. Franchisors, for example, may be less likely to assist their franchisees for fear that micro-management will lead to joint employer status.
This undesirable business environment ultimately will make it harder for NATSO members to grow their businesses and create jobs.
NATSO has provided a joint employer summary and compliance guide outlining the issue's implications for NATSO members and providing best practices.
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