Labor Secretary Embraces Microsoft to Slam Joint Employment

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By Ben Penn and Hassan A. Kanu

Labor Secretary Alexander Acosta expounded on his opposition to vague joint employer standards by invoking a situation in which Microsoft Corp. got dragged to the bargaining table on behalf of a contractor’s union.

Acosta, addressing the Federalist Society’s National Lawyers’ Convention on Nov. 16, explained his basis for rescinding an Obama-era joint employment memo that interpreted a broad array of scenarios when a company could be held responsible for an affiliate’s wage violations. To illustrate his point, he ventured outside the Labor Department’s purview by describing Microsoft’s 2016 amicus brief in a case that challenged a different joint employer standard—that established by the National Labor Relations Board.

“A government rule that grounds liability in vague notions of indirect control, however, generally ends poorly,” Acosta said. Shortly after Microsoft began requiring suppliers to provide employees with 15 days of paid leave, “the union representing employees at one of Microsoft’s suppliers demanded that Microsoft engage in collective bargaining” as a joint employer, he said.

An appeals court in Washington, D.C. is currently considering a challenge to a 2015 decision in which the board said a business that exerts indirect control over an affiliated business’s workers may be considered their joint employer for collective bargaining purposes. Microsoft has urged the court to shoot down that decision.

The company’s brief followed a separate 2016 board ruling ordering the Microsoft to comply with a subpoena aimed at exploring whether it’s a joint employer of contract workers supplied by a staffing entity. The staffing company signed a collective bargaining contract with a union representing those workers shortly after the board’s decision.

DOL Weighing in on Labor Board Business?

Business advocates are hoping that a new, GOP-majority NLRB will reconsider its approach to joint employer liability. Acosta suggested it was improper for the Obama-era board to establish the current interpretation of joint employership via a case decision.

“Regardless of economic calculus, the joint employer doctrine certainly impinges on freedom of contract and changes long-standing notions of corporate law,” he said. Substantial policy changes should happen “through the Democratic process—through Congress—not by regulation, certainly not by subregulatory” processes that don’t include public notice and comment periods.

Acosta didn’t say, however, what he thinks the board should do about the joint employer liability now in front of the appeals court. The board could change the standard in a new case decision or through rulemaking. How it eventually proceeds may also depend on how the appeals court eventually rules on the challenge.

Two board members who were present didn’t address the labor secretary’s comments.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com; Hassan A. Kanu at hkanu@bna.com

To contact the editor responsible for this story: Chris Opfer at copfer@bna.com

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