NLRB’s Joint Employer Ruling Challenged in Court

CEI applauds Browning-Ferris’ stand against the National Labor Relations Board's upending of employment liability and flexibility, otherwise known as the new joint employment standard. 

The NLRB regulators last year unilaterally changed the definition of who is a joint employer in a way that could expose tens of thousands of businesses nationwide to increased costs and liability by making one employer responsible for another’s actions. The NLRB’s action will block a path toward entrepreneurship, reduce job creation, expand employer liability, increase employment insurance costs, lead to a surge in lawsuits, and disrupt thriving business models. It's a move that aids labor union organizing at the expense of jobs and economic opportunity.

Regulators also set a bad precedent. The Board overturned decades-old employment law that held a joint employer relationship existed when one company exercised “direct and immediate” control over another company’s workforce. But now, under the NLRB’s new definition, companies may be held legally liable for labor violations committed by other employers with whom they contract, even if they only exercise indirect control, unexercised potential control, and a vague notion of “economic and industrial realities.”

While the Obama administration’s NLRB suggests the motive behind the rulemaking is to hold Big Business accountable, small businesses, like contractors, will likely bear the brunt of the Board’s decision. By increasing liability, franchisors as well as employers who use contractors will likely pull back jobs and work they previously outsourced to small businesses. The decision will reduce opportunity for entrepreneurs and hold back job creation at a time when small business creates 60 percent of new jobs.

With millions of hardworking men and women out of job or having to settle for part-time work, now is not the time to hamper job creators with greater liability that diminishes incentive to take on more workers.