Lawmakers in Alternate Universes on Joint Employer Issue

By Hassan A. Kanu and Tyrone Richardson

Lawmakers expressed a deep partisan divide on the issue of joint employership at a House committee hearing July 12, despite calls to develop bipartisan legislation to define when multiple businesses can be considered a worker’s employer.

The hearing also involved some scathing exchanges between lawmakers and members of the panel testifying before the committee, which included business owners, union representatives, and a law professor.

“It sounded like some people are living in an alternative universe as I sat here and listened,” Education and the Workforce Committee Chairwoman Virginia Foxx (R-N.C.) said. “We really do have totally different points of view on many of these issues.”

Joint employership usually comes up in regard to wage, safety, and other types of employment liability. The issue is particularly relevant in today’s economy, given the continuing proliferation of gig and temporary work, contractors, and subcontractors. It’s also a central concern of franchisors and franchisees.

The National Labor Relations Board ruled in Browning-Ferris Industries of California Inc. that organizations with indirect control over contractors, franchisees, or staffing agency workers can be considered their joint employer. A federal appeals court in Washington, D.C., is currently hearing an appeal of the case.

‘Congress Should Settle’ Liability Standard

Business and franchising group representatives at the hearing added to calls for House members to move forward with new legislation to reverse the NLRB’s ruling.

“Simply put, the question of when an employer should be held liable as a joint employer is an unsettled question of law, and Congress should settle it,” said Jerry Reese II, director of franchise development at the New Orleans-based Dat Dog LLC, who spoke on behalf of the Coalition to Save Local Businesses. “That is why our coalition is calling upon Congress to return to the very successful, traditional joint employer standard that helped businesses grow and succeed for decades.”

A witness representing FedEx put forth its proposal for a standard, statutory definition of “joint employer” and a safe harbor provision for employers that have legal compliance programs with their vendors or contractors.

Republicans generally disfavor the NLRB rule, arguing that it creates confusion for employers, unfairly extends liability, and harms small business owners. Democrats believe that a more narrow rule would weaken legal protections for employees and allow employers to avoid responsibility for workplace liabilities.

“Research shows that the consequences for workers in our economy’s increasingly outsourced growth sectors are lower wages, fewer benefits, and less workplace safety,” said ranking Democrat Bobby Scott (Va.). “Without joint employer standards, contingent workers may have no remedies for unfair labor practices, safety violations, or wage theft.”

The GOP favors a rule that would require a more direct relationship between employer and employee, and otherwise narrow the circumstances in which businesses are considered joint employers.

Revision of Multiple Statutes ‘At Play’

Another issue is whether any legislative proposals should affect only the National Labor Relations Act, or other employment statutes, such as the Fair Labor Standards Act.

Litigation over joint employership has “migrated to other federal laws like the FLSA,” so that statute “is definitely at play,” Shannon Meade, director of labor and Workforce Policy at the National Restaurant Association, told Bloomberg BNA after the hearing.

The NRA and U.S. Chamber of Commerce have said they are working with committee members on legislation. Some committee members have indicated plans to roll out a bill soon.

A spokeswoman for the committee reaffirmed that in a statement to Bloomberg BNA.

“It’s clear a legislative solution is needed, and that’s what the committee will be working towards in the weeks ahead,” she said.

Little Common Ground

Republicans’ proposals would lead to a rule that would “guarantee freedom for employers” that use contractors or temp workers to “insulate themselves” from liability issues while maintaining control of the workplace, Rep. Donald Norcross (D-N.J.) said.

Michael C. Harper, a Boston University School of Law professor, testified that the hearing was a “reaction to a lobbyist manufactured tempest in a teapot.”

But Foxx and other GOP members questioned whether the diverging points of view on issues such as joint-employer liability are due to some lacking experience in the private sector.

“I think a lot of it has to do with lack of experience in the private sector by some of our friends and some of our witnesses,” said Foxx, a former small business owner. “That there is absolutely no experience in the private sector and somehow or another opinions have been formed off of maybe one bad person.”

“I don’t know a bad employer,” Foxx said. “I’m sure they’re out there, but I sure don’t run into them. I hear horror stories all the time from the other side, but the employers I know care about their workers.”

Foxx ended the more than two-hour hearing with calls for House action. She criticized court decisions upholding and interpreting the NLRB’s rules, and cited the U.S. Constitution’s separation of powers.

“The founders did not intend for the courts to run this country. The founders intended the people’s body to run this country,” she said. “To suggest we need to leave all of this up to the courts is, I think, totally out of touch.”

To contact the reporter on this story: Hassan A. Kanu in Washington at hkanu@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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