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NLRB General Counsel: Joint Employer Proposal Falls Short (1)

Dec. 19, 2018, 7:45 PMUpdated: Dec. 19, 2018, 11:18 PM

The National Labor Relations Board’s top lawyer unexpectedly criticized the agency’s proposal for determining when multiple companies should share joint liability for labor law violations.

The proposal for a “joint employer” liability standard isn’t specific or demanding enough and would improperly force certain companies to bargain with unions, NLRB General Counsel Peter Robb suggests in comments released Dec. 19.

Robb’s criticisms could push the board to pursue a joint employer rule that is even more favorable to businesses than its current plan. The current proposal would categorize a company as a joint employer if it has “direct and immediate” control over the most important terms of a worker’s job, largely returning the NLRB’s legal test to the pre-Obama policy. A contentious Obama-era decision expanded the test to also consider indirect and unexercised control. That policy is still in effect.

Under Robb’s recommendations, a company found to be a joint employer wouldn’t have to bargain with a union unless it controls “all listed essential terms and conditions of employment,” which Robb said should be defined and listed in the rule.

“Indeed, it makes no sense for an entity that may control all terms of employment other than wages and benefits to be compelled to appear at the bargaining table,” Robb wrote.

Worker advocates have opposed the current proposal for a variety of reasons, including that businesses are able to skirt potential liability by simply outsourcing some components that employers typically handle directly.

Robb also said an employer should be legally liable for a co-employer’s unfair labor practices only if it participated in the unlawful conduct.

“We strongly urge the Board to articulate explicitly in its final rule that a joint employer finding in and of itself does not create legal liability for the unfair labor practices of its co-employer business partner and does not create a bargaining obligation,” the general counsel wrote.

The recommendations could significantly slow down the joint employer rulemaking process. Not only is the NLRB obligated to respond to Robb’s detailed reformulation of the proposal, but the comments could also prompt the board to revise its own proposal—or even inspire further public input from businesses that agree with the general counsel.

Franchises, Hospitals Get Special Treatment

The NLRB’s legal framework for joint employment can be crucial for franchisers and companies that rely on contract labor. One closely watched example is an ongoing case involving claims that McDonald’s exercises enough control over franchisees that it should share responsibility for unfair labor practices. Many McDonald’s workers recently voiced their criticism of the proposed standard.

Robb praised the board for taking “an important step” with its proposal by making the standard for joint employment more predictable and stable. But the proposal “fails to provide sufficient clarity,” the general counsel said.

He recommended that the board include determination of wages, hiring and firing authority, and the power to discipline in a list of specific factors constituting the essential terms and conditions of employment. “Such a list will better guide all parties as to what their obligations are,” he said.

The board’s joint employer rule, Robb said, should similarly set forth the level of control necessary to make a company a joint employer.

Robb also urged the NLRB to address industry-specific issues in the rule, singling out the franchise industry and hospitals.

Franchised businesses are required by law to maintain certain aspects of their trademarks, including brand uniformity—ensuring that the same or nearly the same products and services are produced at each location.

And hospitals are generally heavily regulated entities and necessarily include workers with a unique and significant degree of expertise.

Those considerations warrant a “more nuanced and different approach” to joint liability, and the board should clarify how an eventual rule will apply in those contexts, Robb said.

The board is accepting comments until Jan. 14.

To contact the reporters on this story: Hassan A. Kanu in Washington at hkanu@bloomberglaw.com; Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Terence Hyland at thyland@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com