In 2015, the National Labor Relations Board (NLRB) overruled more than 30 years of bipartisan precedent when issuing its decision in Browning-Ferris Industries of California Inc. (BFI). In doing so, the Board replaced the predictable and clear “direct and immediate control” standard for determining joint-employer status with a new test based on “indirect” and “potential” control over workers’ terms and conditions of employment. The decision exposed a broad range of businesses, from contractors and subcontractors to franchisors and franchisees, to workplace liability for another employer’s actions and for workers they do not employ. Since that time, dozens of cases have been filed and several rulings have been made that incorrectly determine that franchisors and franchisees are to be held as “joint employers.”
Under the Trump administration, and with a pro-business board in place, the NLRB issued a 3-2 decision explicitly reversing the “indirect and potential” standard and returning the joint employer standard to require “direct control.” However, with the retirement of Chairman Philip Miscimarra, and a Feb. 26 order vacating the direct control decision, the BFI decision still stands.
On April 11, the Senate confirmed business lawyer John Ring to fill the open seat on the National Labor Relations Board (NLRB). This fills all NLRB slots and gives pro-business members a 3-2 majority. The business community is hopeful that the new NLRB makeup may again return the joint-employer standard to require direct control.
In Congress, a bipartisan group of pro-business representatives is attempting to clarify, limit and defund efforts to enforce the new standard. On Nov. 7, the House passed the Save Local Business Act (H.R. 3441), which restores the “direct-control” definition under both the National Labor Relations Act and Fair Labor Standards Act. Eight Democrats and all Republicans supported the bill, which now sits in the Senate. If passed into law, the Save Local Business Act will provide a permanent solution which is not influenced by the political will of the NLRB.
THE ASK:
House: Check vote – thank if voted for; discuss if voted against.
Senate: Please support legislation which includes a provision returning the joint-employer standard to require direct control.
TALKING POINTS
- The “direct control” definition has been in place for more than 30 years and correctly defines the terms in which an entity should be considered a joint employer.
- The “indirect control” standard will force franchisors to exercise unprecedented control over franchisees, destroying the independence that has made the franchise model work for decades.
- The “indirect control” standard incorrectly defines small franchisees as “big business,” erodes the proven franchisor/franchisee relationship and impedes entrepreneurship by treating franchisees as glorified managers.
- Senate: please act quickly to appoint John Ring to the NLRB so that the board may move forward in conducting its business.
- Passage of the Save Local Business Act will provide a permanent solution not influenced by the political will of the NLRB.
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