Congress Commences Action on HR Policy-Backed Bill to Reverse NLRB Joint Employer Decision

Employment Law

This week, the House Health, Education, Labor and Pensions Subcommittee held a hearing on an HR Policy-supported bill to reverse the National Labor Relations Board’s controversial "joint employer" decision, while a federal judge in California dismissed most arguments that McDonald's is a joint employer with a franchisee.  The Protecting Local Business Opportunity Act (S. 2015/H.R. 3459) would restore the traditional standard to the National Labor Relations Act such that two or more employers would be considered joint employers only if the control over essential terms and conditions of employment is actual, direct, and immediate.  The judge in the California suit, a class action suit over unpaid overtime under the Fair Labor Standards Act, disagreed that the company became a joint employer through mandatory software the company uses to monitor store performance, a factor used by NLRB General Counsel Richard Griffin in issuing complaints against the franchisor.  Judge James Donato further explained "the evidentiary showings about McDonald's strength as a franchisor do nothing to negate or call into question the dispositive fact that the authority to make hiring, firing, wage, and staffing decisions at the . . . restaurants lies in [the franchisee] and its managers – and in them alone."  However, Judge Donato left the question of "ostensible agency," where McDonald's may be liable because employees believed McDonald's to be their employer, for a jury to decide.  At the House hearing, Education and the Workforce Committee Chairman John Kline (R-MN), a cosponsor of the Protecting Local Business Opportunity Act, said of the bill, "when we crafted this short piece of legislation . . .we were very, very concerned about losing the certainty and predictability that the dissenters [of the NLRB's Browning Ferris decision] talked about, and moving into unprecedented bargaining obligations and an ambiguous standard."  Former NLRB Member Charles Cohen of Morgan, Lewis & Bockius said of the Browning Ferris decision, "as anyone well versed in labor relations would know, this decision is all about enhancing union leverage . . . ."  HR Policy signed on to a letter written by the Coalition for a Democratic Workplace urging Congress to pass the bill.