Conservatives and employers are lining up against a proposed labor-friendly rule by the Democrat-majority National Labor Relations Board that would open the door to more employee claims against businesses and make it easier for workers to organize.
The draft joint-employer rule revamps the NLRB’s test for determining when a business is legally responsible for labor law violations at another business. It would reverse a Trump-era rule requiring proof of “direct and immediate” control over workers and impose a standard of “indirect control.”
“Under this test, companies who exercise direct or indirect control over workers could be considered a joint employer with a staffing company, contractor or franchisor for purposes of the [National Labor Relations] Act. That means a company could be sued for labor law violations and could conceivably be required to recognize and bargain with unionized workers they use through a contracting or staffing business,” wrote labor attorney Charles Plumb of the McAfee & Taft law firm in Oklahoma in a blog post.
The board’s majority, now under Democratic control due to President Biden’s appointees, said the 2020 rule during the Trump administration imposed restrictions that “unnecessarily narrow the common law and which threaten to undermine the goals of federal labor law.”
Republican NLRB members John Ring and Marvin Kaplan, who approved the 2020 rule, dissented from the decision this week, saying the revision comes too soon after the last change and is “fundamentally flawed.”
Critics of the new proposed rule say it will hurt businesses, cause job losses and make it easier for employees who work for a contractor, temp agency or franchise to drag bigger companies into labor disputes.
“This is the worst possible time for the Biden NLRB to resurrect a job-killing joint employer rule that will threaten hundreds of thousands of small business jobs,” tweeted Sen. Mike Braun, Indiana Republican. “I urge the NLRB to abandon this misguided action and preserve the 2020 joint employer rule.”
The proposal “would have a chilling effect on the hotel industry & the entire U.S. franchising model,” tweeted Chip Rogers, president and CEO of the American Hotel & Lodging Association.
The board’s apparent goal is to encourage collective bargaining, according to Sean Higgins, a labor policy specialist at the Competitive Enterprise Institute.
Mr. Higgins said the standard of indirect control has “no clear definition” and “will only create more confusion.”
“Adopting it as a standard runs contrary to the whole point of a federal rule, which is to provide clarity about government regulations,” Mr. Higgins said.
The joint-employer policy has been a subject of partisan wrangling since President Obama’s second term when the board’s Democratic majority sought to broaden its reach.
The test applies when workers at firms such as franchisors and staffing companies seek to organize or file claims of unfair labor practices. The proposed revision would deem linked firms to be joint employers if they “share or co-determine” certain essentials such as wages or benefits, even if one party only has “indirect” control, according to law360.com.
The NLRB has asked for public comment through Nov. 7 before it issues a final rule.