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Middle-Market Public Policy Roundup

The NLRB's definition of joint-employer changes again, modifications to Dodd-Frank appear imminent, and the business community reacts to Gary Cohn's departure.

Middle-Market Public Policy Roundup

This week’s roundup looks at the NLRB’s return to an Obama-era definition of joint-employer that could increase the labor-related liabilities of franchisers, general contractors and similar entities. Meanwhile, a bill featuring modifications to Dodd-Frank is moving forward, and the business community reacts to the resignation of Trump’s top economic adviser.


NLRB Joint-Employer Standard Reversed (Again)

The National Labor Relations Board last week vacated its 2017 decision about what constitutes a so-called joint-employer, reverting to a previous Obama-era definition that significantly expanded the circumstances under which two or more companies could be considered a joint-employer. The action increased the liability that franchisers, general contractors and similar entities face for the labor-law violations of other employers with which they conduct business.

The NLRB’s move to vacate its ruling in last December’s Hy-Brand Industrial Contractors case came in response to an inspector general’s decision that NLRB board member William Emanuel, whose law firm was involved in a related lawsuit, must be recused from the case.

In the 2015 Browning-Ferris case, which preceded Hy-Brand, the NLRB opted to expand the definition of joint-employer. As a result of the ruling, the set of companies that can be held liable for labor law violations or required to bargain with labor unions was expanded to include any company that exercises “indirect” and “potential” contractual control over the employees of another company.

The ruling marked a significant increase in scope from the prior standard, which held that companies classified as joint-employers had to exercise “direct” and “immediate” control in practices surrounding hiring, firing, supervision, direction, etc.

As a result of the ruling, the set of companies that can be held liable for labor law violations or required to bargain with labor unions expanded to include any company that exercises “indirect” and “potential” contractual control over the employees of another company.

In December 2017, the NLRB overruled the Browning-Ferris decision with its Hy-Brand decision, reverting to the previous standard of direct contractual control over employment terms creating liability for labor law violations.

After the Hy-Brand decision was vacated on Feb. 26, the Browning-Ferris case, previously in the U.S. Court of Appeals for the District of Columbia, was remanded back to the NLRB for consideration. Additionally, there has been some congressional consideration for amending the National Labor Relations Act to establish a direct control standard.

Dodd-Frank Modifications Well Underway

The bipartisan Senate bill MMG reported on previously—which would offer the first major modifications to the Dodd-Frank Act since its enactment—is currently under debate in the Senate and appears increasingly likely to pass. The Hill reports that GOP House members are warming up to the proposal. The bill had previously faced potential difficulties as the more conservative chamber of Congress rallied for the Financial CHOICE Act, the Dodd-Frank “repeal and replace” bill championed last summer in the House of Representatives by Financial Services Committee Chairman Jeb Hensarling.

Discussion is heating up in the Senate, and it is becoming clear that the bill is one of the last opportunities for legislation outside of the omnibus spending package that must be passed by March 23. The urgency has led to a flurry of House members and lobbyists working to get their desired amendments surrounding financial services into the package.

The progressive wing of the Democratic party is pushing back hard against the bill. Sens. Elizabeth Warren and Sherrod Brown have offered amendments intended to outline a variety of consumer protections, and to identify the parts of Dodd-Frank that they think should be strengthened. The Center for American Progress and other progressive groups are opposing the bill, mobilizing large swaths of activists to bombard the 13 Democratic co-sponsors with a torrent of phone calls and letters.

Gary Cohn Resigns

President Donald Trump’s top economic advisor, Gary Cohn, has tendered his resignation, WSJ reports. There is some trepidation at the economic effects of his departure. The remaining top-ranking trade officers are Commerce Secretary Wilbur Ross and White House adviser Peter Navarro, both of whom are significantly more protectionist than Cohn and generally in favor of tariffs.

Cohn, previously president and COO of Goldman Sachs, has been considered for many high-profile roles, including that of Fed chair and chief of staff, Axios reports. He was instrumental in passing the tax reform package last year and was widely considered a reassuring presence on the economic front.

Check back each Friday for the weekly Public Policy Roundup. Is there a policy issue you’d like us to cover? Send your suggestions to MMG Editor Kathryn Mulligan at kmulligan@acg.org.

Ben Marsico

Ben Marsico is ACG Global’s manager of legislative and regulatory affairs.