Joint Employer

HR Policy Association believes that the new standard accorded joint employer cases by the National Labor Relations Board is far too broad to provide consistent results and adequate notice to companies doing work with contractors, franchisees, and staffing agencies. Without knowledge of consistent factors to be considered, companies are left in a state of uncertainty, which will hinder the productive business relationships between companies and contractors/staffing agencies. Moreover, the standard will inhibit companies from taking beneficial actions – such as establishing minimum compensation and training standards for contractors – that could otherwise be considered beneficial to the contractor’s employees.

Joint Employers are jointly and severally responsible for the labor practices of the other employer as it pertains to the employee whom they “share”. This presents a challenge for employers because one employer potentially has no control over the unfair labor practices of the other, but is left open to liability with no contribution to the unlawful actions. This scenario has become significantly more likely under the NLRB’s new ruling in Browning-Ferris Industries. Using a staffing firm or contractor has proven to be an efficient way for companies to fill temporary gaps in the workforce. However, under the NLRB’s new ruling, a company, which has only a commercial relationship with the staffing agency or contractor, is potentially liable for the unlawful labor practices of the agency or contractor if the alleged joint employer has reserved potential (as opposed to actual) control over the essential terms and conditions of employment (i.e., hiring/firing prerogatives, authority in directing job activities, scheduling, etc.).

The Association opposes the broadening of the joint employer standard because of the chilling effect it will have on commercial relationships between businesses and the impact it could have on the labor market overall. The burdens placed on both the primary employer and third party company will become so great that the benefits of the commercial relationship will be vastly outweighed and lost. In order to preserve the balance of risk and reward that is inherent in good business practices, the Association opposes the new broad standard and supports the Protecting Local Business Opportunity Act currently pending in Congress.