House Passes Bill to Return to Traditional Joint Employer Standard

By Adam B. Merrill

On November 7, 2017, the U.S. House of Representatives voted on and passed the Save Local Business Act, H.R. 3441 (the Act). If passed by the Senate and signed into law by President Trump, the Act would reverse a National Labor Relations Board (NLRB) decision that expanded the definition of what entities can be considered “joint employers” for purposes of the National Labor Relations Act (NLRA).  

The House’s passage of the Act is welcome news for entities that may have been considered “joint employers” pursuant to the NLRB’s 2015 standard set forth in Browning-Ferris Industries of California Inc., which expanded joint employer liability to employers that exercised or possessed “indirect control” over aspects of another employer’s workforce, such as contractors, franchisees, or staffing agency employees. 

If signed into law, the Act would undo the NLRB’s Browning-Ferris decision and amend both the NLRA and the Fair Labor Standards Act (FLSA) to provide that an employer is only jointly liable for a business partner’s violation of law when it exercises “direct control” of the partner’s workers. This more limited definition encourages employers to enter into profitable relationships with business partners because there is less fear of becoming liable for the other employer’s bargaining responsibilities and employment law violations.

Note the Act faces a tough road in the Senate, where it will need the backing of at least eight Democrats to avoid a filibuster. A companion bill has yet to be introduced in the Senate.
The Act marks the latest effort to reverse the controversial Browning-Ferris decision, which is currently on appeal in the D.C. Circuit. It also comes as the U.S. Supreme Court has been asked to take up a decision expanding joint employer under the FLSA.

We will continue to monitor the Act’s progress, as well as the Browning-Ferris case as it winds its way through the courts.