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Tom Donohue: If Labor Law Isn’t Broken, Don’t ‘Fix’ It

By Tom Donohue |

Leave it to the National Labor Relations Board to “fix” what’s not broken. There are clear indicators that the NLRB intends to overturn its long-standing “joint employer” standard — a move that could redefine what it means to be an employer and unleash a flood of complications for America’s job creators.

Under the current standard, a worker is usually employed by the company who hired him or her. For example, a food service employee who works at a franchise location works for the franchise owner — not the brand name itself. A contract worker who performs cleaning services at an office building works for the janitorial company under contract — not the building owner.

In some cases, two parties working together are considered “joint employers” if they both have direct control over the employees. A factory owner and a vendor that provides workers might be considered joint employers if the owner disciplines workers and sets the schedule but the vendor signs the paychecks.

This clear-cut standard has been working well for 30 years. It’s given businesses increased flexibility and competitiveness, while creating employment opportunities for millions of Americans.

But two major cases before the NLRB suggest the agency could overturn the standard. In one, the NLRB could hold McDonald’s USA liable for the employment decisions of individually owned and operated restaurants — a case that could redefine the relationship between franchisors and franchisees. And in the case of Browning Ferris, the NLRB could rule to significantly loosen the standard for joint employer status between contractors and subcontractors.

This potential change under the National Labor Relations Act would allow unions to characterize large, well-known businesses as the “employer” of targeted groups of workers who are employed by smaller companies. This would enable and encourage labor groups to launch very public organizing campaigns in hopes that the larger employer would bend to public pressure and recognize the union. Larger companies could also be forced to engage in collective bargaining if the smaller “joint employer” is organized.

Upending the joint employer standard could also set an alarming precedent under other employment laws. For example, a company could be held liable for violations committed by its subcontractor, vendor or franchisee. This could bring major paydays for plaintiffs’ lawyers. Given that damages can be tied to the number of employees a company has, it could be much more profitable to sue a major corporation than a small business.

Changing this long-standing, well-working standard would not be for the benefit of job creators, workers or our economy — it would be for advancement of big labor’s agenda and the enrichment of the plaintiffs’ bar.

— Tom Donohue is president and CEO of the U.S. Chamber of Commerce. The opinions expressed are his own.




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