House Approves Joint Employee Definition

The move undoes the Obama administration’s expanded theory of joint employer liability for labor violations.
November 10, 2017

WASHINGTON – This week, the House voted 242-181 to approve a measure to roll back the Obama administration’s definition of joint employer liability for labor law missteps, Law360 reports. The Save Local Business Act is designed to change the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA) to read that a business is only jointly responsible for a company partner’s labor law violations when it exhibits “direct control” of that partner’s employees.

The National Labor Relations Board (NLRB) used this reading until 2015, when it decided that companies are considered joint employers—and have collective bargaining responsibility—when one business has ‘indirect or potential control” over the other’s workers (the case involved Browning-Ferris Industries). The Labor Department then applied this case to the FLSA, but removed that guidance five months ago. While the NLRB hasn’t gone back to the Browning-Ferris ruling, the D.C. Circuit Court is reviewing the matter.

“What does it mean to have ‘indirect or potential control’ over an employee?” said Rep. Bradley Byrne (R-AL), who sponsored the proposal. “I practiced labor and employment law for decades and I do not know what that means, so I can only imagine the confusion Main Street businesses have faced.”

Even though the Department of Labor has removed its recommendation related to this bill, supporters said that there continues to be lawsuits targeting potential joint employers. “Every time I’m faced with a wage and hour lawsuit where there’s a temporary agency involved, it’s a sure bet it’s not only going to be the temp agency that’s named as a defendant,” said Diyari Vazquez, a lawyer with Michelman & Robinson LLP.