The National Labor Relations Board has brought back a 2015 ruling — much disputed by restaurant franchisors and franchisees alike — that loosened the definition of a joint employer.
Due to a conflict of interest by NLRB member William Emanuel, the board vacated a December decision, Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co., which overturned the 2015 Browning-Ferris Industries of California Inc. ruling.
“The Board’s Designated Agency Ethics Official has determined that Member Emanuel is, and should have been, disqualified from participating in this proceeding,” the decision said.
“Because we vacate the Board’s earlier Decision and Order, the overruling of the Browning-Ferris decision is of no force or effect,” it added.
The 2015 decision threatened to restructure the relationship between franchisors and franchisees by potentially defining franchisors as joint employers of workers hired by franchisees. That could make franchisors liable for labor infractions by franchisees.
Although the NLRB’s ruling Monday didn’t specify Emanuel’s conflict, human resources publication HR Dive reported that he had been a lawyer with the firm Littler Mendelson PC, which was involved in the original Browning-Ferris case.
Since the Browning-Ferris decision and subsequent guidances, franchisors and franchisees have been trying to determine their status, as subsequent clarifications only muddied the waters further.
For instance, in January 2016, the Department of Labor said it would determine whether a franchisor was also a joint employer on a case-by-case basis.
The Competitive Enterprise Institute, a free-market public policy organization based in Washington, D.C., criticized the NLRB’s latest decision and called for legislative action.
CEI labor policy expert Trey Kovacs said in a statement: “The NLRB’s decision to vacate its own recent ruling on joint-employer liability now puts greater pressure on the Senate to pass the Save Local Business Act. This turn of events illustrates how no decision by the Board is permanent and why it is crucial for Congress to set a standard into law instead of letting regulators decide. Without a permanent legislative fix, the overly broad and vague Obama-era Browning-Ferris joint-employer standard is once again a threat to entrepreneurs and workers worldwide.”
The act, which passed the House of Representatives on Nov. 7, 2017, states: “A person may be considered a joint employer in relation to an employee only if such person directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over essential terms and conditions of employment, such as hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, or administering employee discipline.”
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