Former federal administrators condemned the Obama administration Tuesday for its radical departure from decades of established workplace law.
President Barack Obama and his administration have done a lot to change how workplaces operate. The National Labor Relations Board (NLRB) and Department of Labor (DOL) have been at the forefront of the policy push, but now even their own former administrators are warning the changes are dangerous.
“Most regulatory agencies, like most courts, are reluctant to overturn long held rules,” former NLRB member Brian Hayes said during a conference on the regulatory changes. “Unfortunately the current NLRB shows known of that reluctance.”
The U.S. Chamber of Commerce and the International Franchise Association hosted the former administrators to discuss what is known as the joint-employer standard. The NLRB is expanding the standard so it’s easier to declare multiple companies that contract together a single employer.
“DOL doesn’t like this, its to strict, it doesn’t let them declare as many joint-employer statuses as they’d like,” former DOL administrator Tammy McCutchen told the crowd. “So they totally depart from the old regulations.”
Businesses used to be declared a joint-employer if one has direct control over the employees of the other. The new standard now considers indirect control, which is common in contractual relationships. A business that get declared a joint-employer becomes liable for the employees and labor disputes of the other company it contracts with, making it legally risky and costly.
“The board has shown no reluctance or restraint in overturning years if precedence,” Hayes said. “The direct result of that is shareholders will be sent out to sea and not know how to comply.”
The NLRB used to look at wage policies, hiring guidelines and other direct controls over employment practices when considering if joint-employer status should be applied under the old standard. Federal officials haven’t yet defined what exactly indirect control entails, making it difficult for businesses to comply. The board has argued the expanded standard is a needed update.
“Through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand,” the NLRB has previously argued in a legal brief. “To make it a putative joint-employer with its franchisees, sharing liability for violations of our Act.”
The NLRB can now declare two or more companies joint-employers on a seemingly case-by-case basis. Republican lawmakers and business groups have warned the new standard puts unnecessary legal burdens on employers by considering indirect control over employment matters.
Former NLRB Supervisory Appellate Counsel Baruch Fellner added during the conference it’s all an attempt to benefit labor unions. Unions can more easily organize multiple businesses when they are considered a single employer. It also allows them to use small businesses as a backdoor to organize their larger corporate partners, like in the case of McDonald’s.
McDonald’s, CNN and Browning-Ferris Industries have been the main cases that have allowed the NLRB to revisit the employment rule. The board declared Browning-Ferris a joint-employer with Leadpoint Business Services Jan. 12, while the McDonald’s case is still ongoing.
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