NLRB Seeks to Rewrite Legal Standard to More Easily Find Joint Employer Relationships

Consistent with the Board’s recent rulings, the NLRB General Counsel wants to overturn decades of legal precedent. The latest target is expanding the joint employer standard in an effort to increase unionization rates among employees. The GC urged the Board to adopt a new standard that would result in finding a joint employer relationship “under the totality of the circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working conditions of the other entity’s employees such that meaningful bargaining could not occur in its absence.” The GC argued, “the broader standard would allow employees to use traditional economic weapons to exert lawful economic pressure on those parties who realistically control the economics of the relationship – even if they do not ‘directly’ control working conditions.”

According to the Service Employees International Union, while most employment relationships in the 20th century involved a single business and its direct employees, U.S. employers have increasingly adopted business models in which a “lead firm” benefits from work performed by employees on another company’s payroll, but they “often retain contractual authority to control the operations parameters of those workers’ employment.”

Conversely, the National Association of Manufacturers said, “changing the standard to create a legal fiction that a host facility is the ‘employer’ of another wholly independent company’s employees – whose employees it does not hire, supervise, discipline, discharge, or pay – will disrupt operations, likely increase costs, and impair [the association] members’ ability to respond to changing market conditions and demands.”

A target of the proposed change in joint employer status is franchisors and franchisees, especially in the fast food industry. Accordingly, the National Restaurant Association has stated that expanding joint employer coverage to franchisors in the food service industry “likely would prompt franchisors to abandon the model to the detriment of franchisees and their employees.”

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