Legislation to Reverse Joint Employer Ruling Passes House

Fewer companies would be liable for labor violations committed by their franchisees or contractors under H.R. 3441 which was passed by the House on Tuesday. The bill would reverse the National Labor Relations Board’s (NLRB) 2015 Browning-Ferris decision by narrowing the circumstances under which businesses can be classified a joint employer. Under Browning-Ferris, companies that exert only "indirect" control over franchisees may still be joint employers. The bill would revert to a standard of "direct" control.

In June, Labor Secretary Alexander Acosta announced that the Department of Labor (DOL) was withdrawing the Obama Administration’s informal guidance on joint employment. The DOL’s Wage and Hour Division issued the "administrator's interpretation" less than six months after the NLRB issued the controversial ruling in the Browning-Ferris Industries case that broadened a business’s potential liability for the labor practices of third-party business partners. The Wage and Hour Division’s January 2016 interpretation attempted to expand the concept of joint employer liability under federal wage and hour laws as well.

PMAA applauds Congress for moving forward to change the actual ruling and we applaud Secretary Acosta for withdrawing the guidance. Now the harder part, moving the bill through the Senate, which is expected to be difficult, but not out of reach. PMAA will continue to monitor the latest.