The Labor Department introduced a proposed regulation today that would make it harder to hold businesses jointly liable when their franchisees or contractors violate the Fair Labor Standards Act.
The DOL proposal would use a four-part test to determine whether a business is jointly liable under the 1938 law, which governs minimum wage and overtime. The test would weigh whether the business has the power to hire and fire; to supervise schedules and “conditions of employment”; to set pay, and to maintain employment records.
The proposal would weaken an Obama-era DOL guidance that said a business need have only indirect control over employees to be held jointly liable.
“The proposed changes would provide courts with a clearer method for determining joint employer status, promote greater uniformity among court decisions, and reduce litigation,” said Keith Sonderling, acting administrator for DOL’s Wage and Hour Division, in a written statement.
Per POLITICO, the National Labor Relations Board will propose a joint employer rule on Friday that would reverse the Obama-era Browning-Ferris standard, handing a major win to businesses.
The proposed rule addresses the circumstances under which franchisors can be held liable for labor violations committed by franchisees and contractors. President Donald Trump’s NLRB sought to reverse Browning-Ferris last year, but its efforts were thwarted by ethics conflicts with one of Trump’s appointees, William Emanuel.
In a written statement, the board suggested that the proposal would revert to the pre-Obama standard.
“Under the proposed rule, an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine,” the board said.
The board’s three Republican members favored the change, while Democrat Lauren McFerran dissented. The fifth seat remains vacant.
The decision to withdraw the Dec. 14 Hy-brand ruling came after an inspector general report said that board member William Emanuel had a conflict of interests when he participated in Hy-brand because of the involvement of his former law firm in Browning-Ferris, the 2015 decision that Hy-brand reversed. Browning-Ferris made it easier to hold companies liable for labor violations committed by their franchisees or contractors.
“The board’s designated agency ethics official has determined that member Emanuel is, and should have been, disqualified from participating in this proceeding,” the board said today. “After careful consideration, and exercising the board’s authority under section 102.48(c) of the board’s rules and regulations and section 10(d) of the act, we have decided to grant the charging parties’ motion in part and to vacate and set aside the board’s December 14, 2017 decision and order.”
“Because we vacate the board’s earlier decision and order, the overruling of the Browning-Ferris decision is of no force or effect,” the board said.
The release from the Board came out at 3 PM today and is shown in full below.
Washington, DC — The National Labor Relations Board (3-0, Member Emanuel did not participate) today issued an Order vacating the Board’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017), in light of the determination by the Board’s Designated Agency Ethics Official that Member Emanuel is, and should have been, disqualified from participating in this proceeding. Because the Board’s Decision and Order in Hy-Brand has been vacated, the overruling of the Board’s decision in Browning-Ferris Industries, 362 NLRB No. 186 (2015), set forth therein is of no force or effect.