NLRB Considering New Joint Employer Regulations

NLRB Considering New Joint Employer Regulations

The US Department of Labor under President Donald Trump and Secretary Alexander Acosta has been working over the past year to undo the regulations implemented by the Obama administration regarding the definition of “joint employers.” Acosta, like many employers and business associations, considers the previous administration’s standard too broad.

Now, the National Labor Relations Board is weighing a rulemaking process to update the standard, the board announced on Wednesday:

“Whether one business is the joint employer of another business’s employees is one of the most critical issues in labor law today,” says NLRB Chairman John F. Ring. “The current uncertainty over the standard to be applied in determining joint-employer status under the Act undermines employers’ willingness to create jobs and expand business opportunities. In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be.”

Acosta’s Labor Department rescinded Obama-era guidelines on the joint employer standard last June, while the National Labor Relations Board’s regional directors were instructed in December to slow enforcement of the Obama administration’s standard. Shortly thereafter, the NLRB overturned its ruling in the landmark Browning-Ferris case, in which it had considered a company to be a joint employer with a subcontractor if it exercised “indirect” control over the terms and conditions of employment or had the “reserved authority to do so.”

The case decided in December, known as Hy-Brand, reintroduced a limitation on the scope of joint employer doctrine such that only companies with direct control over their contractors’ workers would count as joint employers. That ruling was thrown out, however, in February, when the agency’s inspector general found that board member William Emanuel should have recused himself from the Hy-Brand case as his former law firm had been engaged in a related matter.

Since then, the NLRB has been searching for another case it can use as a vehicle for reversing the Browning-Ferris standard, Politico’s Ted Hesson explained on Wednesday, but as both Emanuel and board Chairman John Ring have professional backgrounds in large management-side employment law firms, finding an appropriate case from which neither man would need to be recused has been tricky. Hopes for a legislative solution have also been dampened by the fact that Senate Democrats are unlikely to support a law establishing a more limited standard.

Hence the decision to address the matter through the rulemaking process. That process, however, is also likely to be politically contentious. Already, Democratic members of the board have been engaged in a back-and-forth with Ring on Twitter about his proposal to pursue a regulatory solution, Hesson reported on Thursday. The NLRB’s liberal wing says no stakeholder has requested this rulemaking and that it is the chairman’s individual initiative. As Democratic board member Mark Gaston Pearce pointedly tweeted: “‘Uncertainty’ over the joint-employer standard exists only in the minds of those seeking to reverse Browning Ferris.”