By Olivia Grady

On December 14, 2017, the National Labor Relations Board (NLRB) overruled its 2015 Browning-Ferris Industries decision and returned to the prior joint employer standard. Chairman Philip Miscimarra, Marvin Kaplan and William Emanuel were the majority, while Mark Pearce and Lauren McFerran dissented.

As former CWF fellow Julie Lucarelli described in “Want Unemployment With That?,” the expanded joint employer standard hurt franchises and small businesses with contract employees by increasing their potential liability. Labor organizations, however, supported the new standard even though it hurt contract workers because they wanted to more easily unionize these workers.

Thankfully, last week’s decision will return the standard to what it had been for the past 30 years:  

“In all future and pending cases, two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.” 

In response to the decision, the International Franchise Association released a statement praising the NLRB for its decision and explaining why this change is so important:

“We applaud the NLRB for reversing the Browning-Ferris standard which caused needless confusion and uncertainty for America's 733,000 franchise businesses and 7.6 million employees. Today's decision helps create certainty for franchisors and franchisees in the near term and highlights the need for long-term certainty in this area.” 

Interestingly, the U.S. House of Representatives passed the Save the Local Business Act on November 7, 2017, to overturn the 2015 NLRB ruling and clarify the joint employer standard. Congressman Bradley Byrne (R-AL) introduced the bill, and the bill passed with bipartisan support (242 to 181). The bill now goes to the Senate.

Americans for Tax Reform and the Center for Worker Freedom applaud the NLRB for protecting American jobs and ending the confusion for businesses.