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Employer Groups Want Harmony Among ‘Joint Employer’ Rules

Nov. 27, 2019, 11:15 AM

Business advocates would welcome an EEOC regulation that makes it harder to hold multiple businesses liable for workplace discrimination and harassment, bringing it in harmony with rules pending at two other federal labor agencies. But worker groups say that approach would weaken job protections.

The Equal Employment Opportunity Commission plans to ‘clarify’ its stance on when two or more companies can be considered a “joint employer” of particular workers. Management and worker representatives are scratching their heads about what will be in a proposed rule the EEOC plans to issue before the end of the year.

But both groups have their own predictions about what will happen if the EEOC chooses to narrow its interpretation of joint employer liability. Franchisers, for example, believe a stricter rule can help shield them if they require franchisees to conduct sexual harassment training. Worker groups, however, are concerned that whittling down joint employment liability will make it harder to hold all employers accountable when unlawful bias occurs on the job.

The EEOC has consistently applied a widely used test that focuses on direct control of the work when determining if companies and staffing agencies, franchisers and franchisees, and other similar entities are “joint employers.” That test is already more restrictive than the Obama-era approaches that two other Trump administration agencies—the Labor Department and the National Labor Relations Board—are moving to undo.

It also weighed in on the NLRB’s contentious Browning-Ferris case on the side of flexibility when interpreting joint employer liability. That’s the case that business lobbyists often point to as the poster child for the Obama administration’s more expansive approach to joint employment.

EEOC Chairwoman Janet Dhillon (R) declined Bloomberg Law’s request for comment.

If the agency constricts its stance on joint employer liability in some way, agency Commissioner Charlotte Burrows (D) told Bloomberg Law that she would be concerned. Using joint employer liability, especially on #MeToo issues, has been extremely important to the EEOC, she said.

“This comes up in our farmworker cases, some of the most extreme, most violent cases that you see with respect to rape and sexual assault,” Burrows said. She’s also hesitant about whether the agency can regulate in this area, considering the EEOC’s lack of substantive rulemaking authority under Title VII of the 1964 Civil Rights Act. The agency can issue only procedural rules under Title VII.

“It is an important issue, so I think that’s something we’ll be wrestling with quite a bit,” she said.

Courts, Agencies Weigh In

At least five federal appeals courts have ruled that staffing agencies and their client-employers exert enough control over workers to be deemed joint employers under anti-discrimination laws. This is in line with the EEOC’s stance on the issue.

The U.S. Court of Appeals for the Ninth Circuit weighed in most recently, ruling that two fruit growers in Washington state, as well as their employment agency, were jointly liable for discriminating against Thai guest workers. That case was brought by the EEOC on behalf of the workers in the H-2A program.

The Labor Department and the National Labor Relations Board are also planning to issue new regulations on the topic of joint employer liability. The DOL plans to narrow the scope of situations where businesses can be considered joint employers, while the NLRB would also tighten joint employment liability, but under the National Labor Relations Act.

A hodge-podge of different tests could lead to situations in which, for example, pairs of companies may be perceived as joint employers for harassment claims under Title VII, but not held liable as joint employers for collective bargaining purposes.

It’s unclear how the EEOC would change its approach to joint employment liability. The agency’s current strategic enforcement plan, which is in effect through 2021, prioritizes “issues related to complex employment relationships and structures,” while “focusing specifically on temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy.”

But franchisers think it’s a “no-brainer” for the EEOC to clarify that mandating sexual harassment training for franchisees won’t put them on the hook for joint employer liability, said International Franchise Association vice president of government relations and public policy Suzanne Beall. The franchise industry includes fast-food companies like McDonald’s Corp. and Papa John’s, as well as companies that provide cleaning, child care, personal fitness, and other services.

The employer group previously asked the agency in March for additional information on how to combat #MeToo issues by offering guidance, without being construed as exerting control over a franchisee.

“Brands want to do more, and want to protect their brand, and their franchisees, and their franchisees’ employees,” Matthew Haller, the IFA’s senior vice president of government relations and public affairs said.

Being on the same page as the NLRB and the DOL is also beneficial for franchisers, he said.

Consolidation Efforts?

The announcement of the potential proposal could signal a change, but it could also just signal a consolidation effort. This could be an effort to merge scattered guidance on multi-employer scenarios, former EEOC attorney and current Littler Mendelson shareholder James Paretti said.

“I think an effort to collect and update these various pieces of guidance in one place, in an accessible format, is commendable,” he said. “I also think doing this via a transparent public rulemaking is a positive for all stakeholders, and gives the agency the benefit of public comment.”

Bringing the EEOC closer in lockstep with the NLRB’s proposed rule would be ideal, said Glenn Spencer, senior vice president of the U.S. Chamber of Commerce’s employment policy division.

“We would be happy to see some harmonization there,” he said.

But if the EEOC changes its stance, worker advocates, including the Center for American Progress, remain skeptical, even if it’s unknown what changes, if any, could occur.

“We know that in a changing economy where different types of work arrangements are growing every day, many workers now work in environments with joint employment relationships,” Senior Fellow Jocelyn Frye said. “It is critical to ensure that these workers have access to the same protections as their co-workers and are not relegated to a lesser status where they can become targets of discrimination.”

To contact the reporter on this story: Paige Smith in Washington at psmith@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com