Daily Labor Report®

Labor Board Considering Joint Employer Regulation (3)

May 9, 2018, 6:00 PMUpdated: May 9, 2018, 8:20 PM

The National Labor Relations Board may eventually use a regulation to resolve the hotly contested joint employer liability debate.

The board is “considering engaging in rulemaking to establish the standard for determining joint-employer status under the National Labor Relations Act,” according to the 2018 regulatory agenda released May 9. The item is listed under “long-term actions,” and the description doesn’t include a target date for a proposed regulation.

NLRB Chairman John Ring said in a May 9 tweet that the board’s Republican majority “will work to issue a proposed rule ASAP, and we will consider the views of all interested parties.”

“How could anyone argue against notice and comment rulemaking?” Ring said. “It’s the most fair process and best way to get everyone’s views on the joint employer standard.”

Democratic board member Lauren McFerran tweeted shortly afterward that decisions as to the regulatory agenda are Ring’s prerogative, not formal board action. And Jennifer Abruzzo, the board’s former acting general counsel under a Democratic majority, told Bloomberg Law May 9 that “NLRB rulemaking is done very infrequently, particularly with regard to reversing case precedent, which is typically done through adjudicatory action.”

The announcement comes as the board is still grappling with how to determine one business’s liability for another business’s workers under federal labor law. An Obama-era NLRB decision making it easier to tag companies as joint employers for unionization purposes remains in effect, despite Republican control of the five-member board.

The board dropped a December decision to revert to a more limited joint employer standard as a result of conflicts-of-interest concerns related to Member William Emanuel’s (R) participation in the case. Abruzzo suggested that the rulemaking is “perhaps” a way “to get around potential recusal issues of current board members.”

Some observers and former board appointees have previously said it’s doubtful the NLRB will actually use the regulatory process to clarify joint employer liability. That’s because of the long and drawn-out public comment process required for rulemaking and the possibility of immediate legal challenges.

“It can’t be entirely aspirational, otherwise they wouldn’t have bothered to put it on there,” Michael Lotito, an attorney with management-side firm Littler Mendelson, told Bloomberg Law. But simply flagging the issue for a possible regulation won’t immediately resolve the debate, he said. “Even if engaged in rulemaking, that doesn’t stop them from having to process cases under the existing standard.”

Several Paths to New Policy

The board typically creates or changes labor policy by reinterpreting the federal statute it’s responsible for administrating on a case-by-case basis. A precedent set in one particular case can then apply to other cases involving similar allegations.

The NLRB often changes those precedents in a partisan manner when a new administration takes control, creating a continuous flip-flopping on important workplace policies.

A federal court could also weigh in on the joint employment issue, by ruling in an appeal of the board’s 2015 decision to expand joint employer liability. Alternatively, the board could take up a new unfair labor case and use it to update the joint employment standard.

A third route, through Capitol Hill, appears to be blocked indefinitely. Legislation to address the issue has stalled because it lacks Democratic support in the Senate.

Economic Implications

The joint employer question carries huge economic implications, given the rise of temporary employment and staffing arrangements between companies. A 2015 Government Accountability Office analysis concluded that independent contractors make up 12.9 percent of the U.S. labor force.

Joint employership is also at the center of high-profile litigation against McDonald’s Corp. A group of franchise restaurant workers assert that the corporate parent is liable for alleged retaliation by franchisee owners against employees who participated in Fight for $15 demonstrations.

Business advocates and mostly Republican lawmakers have been urging the board to reverse course on joint employer liability since President Donald Trump took office last year. Supporters say it cuts through complicated franchise, staffing, and other arrangements to give workers a voice and adequate protections on the job.

(Updated to reflect the board members' statements on Twitter.)

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

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

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