News | July 27, 2017

Retailers Support New Legislation To Clarify Joint Employer Relationship

Obama Administration Created Overly Broad Standards

The National Retail Federation welcomed today’s introduction of legislation that would reverse an Obama era expansion of “joint employer” standards that has increased businesses’ exposure to lawsuits and unionization efforts.

“Retailers are relieved that lawmakers are stepping in to clear up the confusion created when bureaucrats muddied the water on what constitutes a joint employer relationship,” NRF Senior Vice President for Government Relations David French said. “One business should not be held responsible for the actions of another, and this measure will clarify that once and for all. Congress needs to pass this bill to put a stop to the growth-chilling litigation caused by the previous administration’s reckless actions.”

The Save Local Business Act was introduced today by House Education and Workforce Committee Chairwoman Virginia Foxx, R-N.C.; Workforce Protections Subcommittee Chairman Bradley Byrne, R-Ala.; Health, Employment, Labor and Pensions Subcommittee Chairman Tim Walberg, R-Mich., Representative Henry Cuellar, D-Texas and Representative Lou Correa, D-Calif. Under the legislation, a company would be considered a joint employer of a worker only if it “directly, actually and immediately” exercised significant control over the primary elements of employment, such as hiring, firing, determining pay or supervising employees on a routine basis.

Guidelines released in January 2016 by the Labor Department’s Wage and Hour Division said two companies that are only technically separate – such as different divisions of the same corporate parent – could be considered joint employers. The agency also said a company could be considered a joint employer of workers hired by an intermediary such as a staffing agency.

Similarly, the National Labor Relations Board said in an August 2015 ruling involving waste management companyBrowning Ferris Industries and staffing agency Leadpoint Business Services that a company could be considered a joint employer even if it had only indirect or unexercised control over workers. In a separate case, the NLRB saidMcDonald’s could be considered a joint employer with its restaurant franchisees. The new standard reversed guidelines followed for more than 30 years in which the NLRB held that a company had to have direct control over the actions of a subcontractor or franchisee’s employees in order to be considered a joint employer.

The Labor Department dropped its expanded standards in June following the election of President Trump but the NLRB standards remain in place.

About National Retail Federation
NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy. 

SOURCE: National Retail Federation