This article appears in full in the November/December issue of Middle Market Growth.
While Congress was away for recess in August, the National Labor Relations Board issued a ruling that impacts the relationship between employers and employees. The NLRB’s 3-2 decision on Aug. 27 expanded the definition of a joint employer to include companies that rely on franchise and contract workers. The decision centered on a case, Browning-Ferris, involving sanitation workers in California.
Identical bills to limit the impact of the NLRB’s decision were introduced on Sept. 9 by Sen. Lamar Alexander, R-Tenn., chairman of the Senate Health, Education, Labor and Pensions Committee; and Rep. John Kline, R-Minn., chairman of the House Education and the Workforce Committee. The legislation, the Protecting Local Business Opportunity Act, would clarify the definition of a joint employer under the National Labor Relations Act of 1935.
Prior to the decision, companies had to have direct operational control to be impacted by labor disputes involving employees. The ruling now broadens that relationship and deems a business a potential joint employer if there is direct, indirect and potential control over matters governing the essential terms and conditions of employment, including hiring, firing, discipline, supervision and direction.
ACG contends that the increased employer liability has wide-ranging consequences beyond the fast food and construction industries and will impact any business that partners or subcontracts with outside vendors and suppliers, thereby creating serious uncertainty for middle-market companies regarding business-to-business relationships …