Joint Employer Rule Sparks Partisan Rift at Labor Board

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By Hassan A. Kanu

The federal labor board chairman’s decision to propose a regulation explaining when one business is the joint employer of another business’s employees reveals a partisan divide at the agency that could signal a contentious rulemaking process.

Chairman John Ring’s (R) suggestion of “so called” uncertainty about joint employer liability is one-sided, Democratic member Mark Gaston Pearce told Bloomberg Law June 5. Any uncertainty in the labor-management relations community “stems simply from those in opposition” to the board’s current approach to the issue, Pearce said in an email.

Pearce, the board’s chairman during the Obama administration, also contradicted an assertion Ring made in a June 5 letter to Congress. Ring suggested that he hasn’t prejudged the joint employment issue any more than the Obama board did when it issued rules in 2011 and 2014 regarding union election procedures.

“Contrary to his suggestion, I did not approach this initiative with preconceived opinions regarding the myriad rules under consideration,” Pearce told Bloomberg Law. “The clear objective of the Board majority was always to improve operations through simplification, modernization, uniformity and transparency.”

Pearce’s comments come one day after Ring said the board plans to have a proposed joint employer rule published by the end of the summer. It’s a sign that the closely watched debate over one of the biggest labor policy issues may be coming to a head.

“Rulemaking is appropriate for the joint-employer subject because it will permit the Board to consider and address the issues in a comprehensive manner and to provide the greatest guidance,” Ring told three senators in the letter. He said it would allow the board to cement the joint employer standard in a way that applies generally, rather than revising it by addressing specific factual circumstances in an individual case.

A NLRB spokeswoman didn’t immediately respond to Bloomberg Law’s request for comment from Ring.

The five-member National Labor Relations Board reviews disputes between employees, unions, and employers, and it’s not uncommon for members in the minority party to oppose case decisions or rulemaking moves by the majority. That opposition typically comes via legal filings—dissenting opinions in board cases and regulatory notices. But current board members have been speaking out against their colleagues’ positions and ongoing actions in public forums in recent months. That includes some quarrelsome back-and-forth tweeting minutes after Ring announced the rule revision.

The rare move to criticize or oppose other members publicly could point to unusual partisan tension at the board. The NLRB in December reversed a handful of significant Obama-era rulings shortly after regaining its first Republican majority in a decade.

Pearce: Chairman Creates Uncertainty

A 2015 board decision made it easier to hold multiple entities liable for violations of labor laws by designating companies in staffing, franchise, or other contractor relationships as joint employers. It also put large companies like McDonald’s and Microsoft potentially on the hook for collectively bargaining with other business’s workers. Both companies have faced joint employer questions since the decision.

Many employers and worker advocates, as well as the labor board chairman, consider joint employment one of the most critical issues in labor law today. That’s largely because of the proliferation of the gig economy and the rise of contractual business and staffing arrangements.

The board currently treats a business as a joint employer if it exerts sufficient direct or indirect control over workers to “share or codetermine” the essential terms and conditions of their jobs.

The board in December, under previous Chairman Philip Miscimarra (R), briefly reverted to a more restricted approach to joint employment. It ruled that a business must have direct control over another’s workers to be considered a joint employer. The NLRB later scrapped that decision after the agency’s inspector general said member William Emanuel (R) shouldn’t have participated because of a conflict of interest.

Ring announced weeks after he was sworn in that the board would use rulemaking to update the joint employment standard.

“This ‘uncertainty’ is now exacerbated by Chairman Ring’s announced intent to engage in rulemaking over the refined joint employer standard implemented just 2 years ago,” Pearce told Bloomberg Law.

Former GOP Board Appointee Supports Ring

Former NLRB general counsel Jerry Hunter, a Republican who was appointed by President George H.W. Bush, told Bloomberg Law that Ring’s actions are entirely appropriate.

“I thought the chairman was direct in basically setting forth the board’s right to engage in rulemaking, and he’s also correct that the Supreme Court has suggested the board engage in rulemaking to give parties clearer notice” of what may constitute a violation, Hunter said.

Ring also announced in his June 5 letter that the agency will begin a “comprehensive internal ethics and recusal review.”

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