Kurt Larkin, a Richmond, Va., labor lawyer, says a new federal standard for determining whether a business acts as a “joint employer” with another business could cause big, confusing problems for businesses throughout the United States.
The new joint employer standard, which was announced by the National Labor Relations Board (NLRB) in August, could turn some companies into accidental employers of other companies’ workers, and it could make complying with the Patient Protection and Affordable Care Act (PPACA) more complicated, Larkin says.
Another labor lawyer, Harris Freeman, a professor of Western New England School of Law, says the federal government needs to expand the definition of joint employer to keep protecting the rights of low-wage workers.
If regulators use the old and narrow definition, staffing agencies, franchisors and other large organizations will continue to profit from arrangements designed to deprive workers of fundamental labor rights, Freeman says.
Larkin and Freeman testified Thursday at a hearing on the new NLRB joint employer standards that was organized by the House Small Business Committee investigations subcommittee.
The NRLB ruled, in a decision on a case involving Browning-Ferris Industries Inc., that it will consider two or more businesses to be joint employers if both entities are employers under common law, and both employers share or codetermine matters concerning the “essential terms and conditions of employment.”
In the past, the board has required a company found to be a joint employer to exercise authority over a worker’s conditions of employment, not just to possess that authority.
Now, the board says, it may find an employer to be a worker’s joint employer if the employer has enough authority to exercise control indirectly, even when the employer does not exercise that control directly and immediately.
Freeman testified that moving to a broader definition is obviously necessary, given the current state of temping and franchising arrangements.
Otherwise, “our nation runs the risk of labor law becoming irrelevant in much of the low-wage economy,” he said, according to a written version of his testimony posted on the committee website.