In a decision upsetting to many employers, the National Labor Relations Board last week expanded the concept of what it means to be “joint employers” under the National Labor Relations Act.
In some cases, two different employers can be considered “joint employers” of the same employee, meaning that both employers share statutory obligations with respect to the employees’ rights guaranteed by the Act. Previously, for two employers to be considered “joint employers” it was necessary to find that they both had “direct operational and supervisory control” over the employees. Under the new standard, though, the Board will look at new factors, including even whether the other purported employer exerts control “indirectly.”
So why does this matter?
Franchisors and franchisees are worried that their relationship will be impacted, since each could be dragged into employer-employee disputes that traditionally would have belonged to the other one alone. In addition, if franchisors are going to be responsible for the treatment of franchisee’s employees, then the franchisees could face stricter control exerted by the franchisor over employment matters that traditionally had been left to the franchisee’s control.
Similarly, an employer that subcontracts functions to another company may be considered a joint employer of the employees servicing the contract, meaning that both employers could be responsible for labor law violations involving those employees. Clearly, then, the value of utilizing subcontractors may be impacted adversely as well.
Employment relationships, including subcontracting decisions, are complex and subject to numerous standards. Contact us to discuss how this or other issues could impact your business.