Fight for $15 union challenges NLRB joint-employer rule

Dive Brief:

The Service Employees International Union, the 2-million-member union behind the Fight for $15 campaign to raise the minimum wage to $15 per hour, filed a lawsuit Friday against the National Labor Relations Board challenging its joint-employer regulation (Service Employees International Union v. National Labor Relations Board, No. 21-cv-02443 (D.D.C., Sept. 17, 2021)).
According to the NLRB's February 2020 rule interpreting the National Labor Relations Act, a business is a joint employer of another company's employees if both share and codetermine the employees' terms and conditions of employment. It further states that both businesses "must possess and exercise such substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees as would warrant a finding that the business meaningfully affects matters relating to the employment relationship."
According to SEIU's complaint, joint-employer status should also be applied to employers with an unexercised right to control (termed "reserved control"). In addition, the essential terms and conditions NLRB clarifies in the rule — wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction — should also include health and safety concerns, SEIU argued.

Dive Insight:

As organized labor struggled for more power over the past few years, joint-employer status became a big source of contention. Organized labor advocates argue that a narrowed definition of "joint employer" lets many large companies that rely on subcontractors or other contingent workers off the hook for their treatment. Further, through franchising models common in industries like fast food, a more narrow definition of "joint employer" can relieve responsibility for employees on the part of the franchisor.

Franchisors say they worry that relaxing the definition of "joint employer" will result in extensive litigation and hold them accountable for decisions and actions over which they did not have control. McDonald's has been a major opponent of the joint employer rule. The chain landed a win in 2019 after the NLRB absolved it as a joint employer for responsibility of labor violations. Those violations were brought forward in 2012 by "Fight for $15" and other labor groups that accused the chain of firing workers for engaging in union activity. The ruling, however, was marred in controversy after the House Committee on Education and Labor discovered one of the NLRB board members worked for a law firm that helped McDonald's franchisees looking for legal assistance in response to employee protests. The member was asked not to participate in the case, but was still involved in the process.

The PRO Act, currently stalled in the Senate after having passed through the House of Representatives months ago, includes a provision that would amend the National Labor Relations Act to define a joint employer as one who "codetermines or shares control over the employee's essential terms and conditions of employment." While the bill is unlikely to find success in the Senate, its passage would make many more businesses joint employers in the context of organizing, requiring their presence at the negotiating table in the case of a union contract. It also would render more employers responsible for violations involving concerted activity.

Like many actions taken by federal agencies, joint employment is subject to political winds in Washington, D.C. The SEIU hopes to overturn a more business-friendly Trump-era rule, which itself was issued partly in response to the Obama-era 2015 Browning-Ferris Industries decision, which expanded application of the joint-employer label. The NLRB overturned that decision in July 2020.

Joint-employer liability is seen in other laws as well. The Fair Labor Standards Act, which pertains to minimum wage, overtime pay, recordkeeping and youth employment standards, has its own reference to joint employers, interpretation of which has also changed with changing administrations.

Most recently, the U.S. Department of Labor rescinded a Trump-era rule which "included a description of joint employment contrary to statutory language and Congressional intent," according to a release from the DOL. The rescission, which was to take effect Sept. 28, 2021, has been delayed to Oct. 5, 2021, according to the agency.