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New definition abandons more than 30 years of clarity and certainty that small businesses rely on for labor stability
Washington, D.C. (June 15, 2016) – The National Labor Relations Board new joint employer standard would make small businesses liable for unlawful labor practices committed by entities completely outside of their control, said the National Federation of Independent Business (NFIB) in a brief filed before the D.C. Court of Appeals.
“The NLRB’s new standard completely muddles the definition of an employer and creates a huge wave of uncertainty,” said NFIB Small Business Legal Center Executive Director Karen Harned. “This is a major concern for small, independent businesses because it will create a severe disincentive to contract with smaller firms. No rational business owner is going to risk a hefty lawsuit for employees that they have not hired.
“Previously, owners were only liable for an employee’s action if they had a direct involvement in essential employment matters, which seems fair. If this rule stands, every business owner will be forced to reevaluate his or her contractual relationships and that could be devastating for franchises and subcontractors.”
At issue in Browning-Ferris Industries of California v. the National Labor Relations Board is whether the NLRB acted within its authority when it decided to broaden the legal standard for joint employer determinations. In doing so, the NLRB abandoned the standard it had established for more than 30 years. Under the new standard, the NLRB said that it would consider indirect factors, such as contractual terms in service and franchising agreements, when determining whether a joint-employer relationship exists.
“Hospitality, retail, manufacturing, construction, food services, cleaning services, and security are just a handful of the industries that will be adversely affected by this standard,” Harned said. “Bottom line, this is just another pro-labor policy from the Obama administration that will hinder job creation in the private sector.”