The joint employer possibility is a dangerous one for employers, as two related (or semi-related) entities may be held liable for overtime monies if the hours worked by employees at the two (or more) entities exceed 40. Now, Republicans in the House of Representatives have introduced a bill to narrow the definition of joint employment under federal wage-hour and labor law. This would provide businesses clear and bright lines for how they structure deals with contractors, but employee advocates take the opposite view and fear that this act would allow companies that outsource labor to avoid liability for workplace violations.

The proposed legislation, entitled the Save Local Business Act (introduced by Rep. Bradley Byrne, R-Alabama) would amend the National Labor Relations Act and the Fair Labor Standards Act to specify that a business may be branded as a joint employer only if it exercises direct, actual and immediate “significant control” over the essential terms and conditions of certain workers. These essential terms and conditions include hiring and firing/discipline, setting of employee rates of pay and benefits, daily supervision of employees, assignment of individual work schedules and assignment of jobs and job duties.

The proposed standard is stricter (i.e. more pro-employer) than the concepts outlined for joint employment in the controversial NLRB decision in Browning-Ferris Industries of California. The proposed law could result in some finality, in that it will place one body of guiding principles in place under both the NLRA and FLSA so that employers will gain some consistency. One practitioner has stated that, “it provides everybody with a clear definition for who will be liable under both laws.”

A pro-employee advocate from the National Employment Law Project stated that this statute could have serious and adverse effects on lower paid workers, who work, for example, in agriculture or janitorial services. The advocate warned that if the bill becomes law, it would be easier for businesses to place buffers between themselves and their workers, e.g. temporary agencies, staffing service providers, which would facilitate the avoidance of liability. Another employee advocate expressed a dimmer, more radical view, stating that the law would “undermine the concept of joint employment” and “set a high threshold to hold an employer who contracts or outsources work” liable for workplace law violations.

The Takeaway

In FLSA cases involving joint employment, there is varying law between federal circuits, but as regards labor law, the NLRB’s interpretation of the statute is given broad deference by courts on joint employment issues. If, however, Congress adopts a specific test, that test will then likely be given considerable deference by courts in future cases. Long story short—this bill is geared towards a considerable narrowing of the definition of joint employment.

At last!