For approximately 40 years, federal labor policies held that two separate employers are "joint employers" if both employers have direct and immediate control over employment terms and working conditions, such as being responsible for tasks like hiring and firing, setting work hours, issuing direction to employees, determining compensation and handling day to day record keeping.
Under a new standard adopted last month by the National Labor Relations Board (NLRB) in a case involving Browning Ferris Industries (BFI), a 3-2 partisan majority said that merely "indirect control" or even "unexercised potential" to control working conditions will now make two separate employers joint employers. This new standard will be applied retroactively.
The new standard means that in many more cases multiple employers will have to jointly negotiate working conditions with unions and share liability for labor law violations. As a result, larger business will exert greater control over the smaller employer who actually owns and operates the business, such as stores, restaurants and day care centers. Additionally, fewer employers will parcel out business to local subcontractors, suppliers or subsidiaries, for fear that they will now be liable for the subcontractor's employment decisions. Millions of employees will also lose the ability to negotiate things like pay, hours and leave time with their direct supervisor, because those decisions will now be made between the larger employer and the union.
The Protecting Local Business Opportunity Act would roll back the NLRB ruling and reaffirm an employer must have "actual, direct and immediate" control over an employee to be considered a joint employer - the same standard that was in place decades before the board's extreme BFI decision.
