House Committee to Dissect Joint-Employer Liability

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By Tyrone Richardson

Members of the House Education and the Workforce Committee Sept. 13 will debate a Republican-led bill aimed at reversing a two-year-old NLRB ruling on joint-employer liability.

A hearing of two of the panel’s subcommittees will address the Save Local Business Act ( H.R. 3441). The bill was introduced by Rep. Bradley Byrne (R-Ala.), chairman of one of the subcommittees, Workforce Protections. The measure would limit the extent to which affiliated businesses are considered joint employers for wage-and-hour and collective bargaining liability purposes.

The bill would amend the National Labor Relations Act and the Fair Labor Standards Act, which requires employers to pay minimum wages and overtime. Byrne’s bill is touted as a key piece in the workforce committee’s agenda so far this Congress. The legislation is co-sponsored by several workforce committee Republicans, including Chairwoman Rep. Virginia Foxx (R-N.C.). In total, the bill has 51 co-sponsors, including two moderate Democrats.

“The committee has heard from countless small business owners over the years on how the vague new joint employer standard puts jobs and entrepreneurship at risk,” committee spokeswoman Bethany Aronhalt told Bloomberg BNA Sept. 11. “That’s why advancing the Save Local Business Act is a top priority for Chairwoman Foxx, and this hearing is the next step.”

The hearing is a continuation of what has been a long-standing debate since the National Labor Relations Board’s 2015 decision in Browning-Ferris Industries of California Inc. The board held that organizations with indirect control over contractors, franchisees, or staffing agency workers may be considered their joint employer under federal labor law.

Bipartisan Divide on Joint-Employer Issue?

The hearing is likely to be followed by a committee markup, which could move the legislation for a possible floor vote. The GOP-controlled Congress will likely pass the measure in the House, but it remains unknown if there would be support from enough Democrats in the Senate to avoid a filibuster. A Senate bill hasn’t been introduced this Congress. A similar measure was floated last Congress, but it eventually failed.

The hearing also comes as provisions remain in the House appropriations bill that would fund the NLRB and the Labor Department. A federal appeals court in Washington, D.C., is currently hearing an appeal of the Browning-Ferris case.

The workforce committee earlier this year held a hearing on joint-employer liability, which highlighted the partisan division among members of the panel. That division is expected to continue in the hearing. Republicans and employer advocates argue that the ruling unjustly extends liability to some employers. Many Democrats support the NLRB ruling, saying a reversal would weaken worker protections.

“The clear goal of this legislation is to dramatically narrow the joint employer definition so no large corporation can be held accountable if their contractors violate workplace laws,” Rep. Mark Takano (Calif.), the Workforce Protections Subcommittee’s ranking Democrat, told Bloomberg BNA Sept. 11. “Nearly a fifth of the job growth since the Great Recession has come through temporary staffing agencies. Instead of acknowledging this trend and its implications for workers’ rights, this bill ignores nuance and legal precedent in favor of an approach that allows companies to profit off workers without being held responsible for their workplace conditions.”

Del. Gregorio Sablan (D-MP) had similar thoughts.

“Workers should have the right to collectively bargain with the employer that controls the conditions of the workers’ employment,” he told Bloomberg BNA Sept. 11. “H.R. 3441 undermines that right.” Sablan is ranking Democrat of the other panel holding the hearing: the Health, Employment, Labor, and Pensions subcommittee.

Company Officials, Labor Lawyers to Speak

The hearing will include testimony from officials of home builder MacDonald Cos. and a franchisee of taco chain Taco John’s. The panel will also include comments from Zachary Fasman, an employment law partner at Proskauer Rose, and Michael Rubin of Altshuler Berzon LLP in San Francisco, who has represented employees in labor law cases.

Rubin told Bloomberg BNA Sept. 11 that the proposed law is designed with “language that benefits big businesses.”

In today’s “fragmented economy,” there are far more labor contractors facing the squeeze “who can only earn profits under their contracts by depriving workers of their right to minimum wages, overtime pay, and other workplace protections,” Rubin said. “The workers have no real recourse, because if they sue the contractor, the dominant company will simply terminate its labor services contract, leaving the small business contractor and the workers alike out in the cold.”

Rubin joins many committee Democrats and others opposing the bill, including the Teamsters, the National Employment Law Project, and the AFL-CIO. Groups including the U.S. Chamber of Commerce, the National Association of Home Builders, the National Restaurant Association, and the International Franchise Association support the bill.

Shannon Meade, director of labor and workforce policy at the National Restaurant Association, told Bloomberg BNA there is growing optimism about passing what is a “top priority” bill.

Meade said it’s a top priority because other labor-related issues have already been addressed this Congress, including reversal of an Obama-era rule that would have required federal contractors to disclose labor violations.

This is “really one of the only holdovers out there and the wind is at our back and we have a lot momentum behind us and lawmakers are seeing that is a number one priority,” Meade said.

Glenn Spencer, vice president of the Chamber’s Workforce Freedom Initiative, told Bloomberg BNA that congressional action on the issue would be best.

“I would love to see that standard overturned and have a law with standards instead of leaving it up to agencies like the NLRB to do it on its own,” he said. “The most direct is for Congress to take action to clarify the law so we don’t have a new board down the road going back to the Browning decision.”

To contact the reporter on this story: Tyrone Richardson in Washington at trichardson@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Chris Opfer at copfer@bna.com

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