With economic recovery and job creation still hurting, Congress should make it a priority this September, when they are back in session, to take action against the National Labor Relations Board’s (NLRB) joint employer standard, which upends long-established business relationships nationwide.
Specifically, Congress should add a provision to the spending bill for federal labor agencies that defunds enforcement of the NLRB ruling. Otherwise, the ruling will go far in deterring new job creation and beneficial business relationships.
Just a year ago, in August 2015, the NLRB decided to expand the instances when one employer is held liable for another employer’s labor violations and responsible for their bargaining responsibilities. In the Browning-Ferris decision, the NLRB overturned 30 years of precedent that determined when two companies are considered joint employers.
Previously, one company had to exert direct control over another firm’s workers to trigger joint employer liability. Now, joint employer liability may be established if one company exercises indirect or unexercised potential control. The new standard is vague and creates immense uncertainty. And we’re still waiting on the NLRB to issue another decision or some sort of guidance to clarify it.
Meanwhile, the business community has started to take steps to mitigate potential liability.
Larger companies will give far less assistance to small companies they contract with. As reported by the Wall Street Journal, Brightstar Care, a franchisor in the home health-care industry, has cut back on support given to franchisees. Prior to the NLRB’s new joint employer standard, the healthcare provider had helped franchisees with “employment problems, such as difficult employees. Now, ‘we refer them to a human resources attorney,’” said Shelly Sun, a founder of Brightstar Care.
Brightstar Care also discontinued its online job posting portal that allowed franchisees to advertise job openings. Without that service, the cost of posting jobs shifts to the franchisees, which is not cheap. One franchisee, Susan Rather and Jeffrey Tews, created their own online job posting system, costing them $10,000 annually.
Large companies may also steer clear of contracting with small businesses entirely in order to avoid joint employer liability.
Either action, less assistance or less contracting, is bad news for job seekers and budding entrepreneurs. Since 1990 big businesses have eliminated 4 million jobs while small businesses have added 8 million, according to the Small Business Administration. Entrepreneurs will hit a wall if large businesses are unwilling to work with them.
The situation isn’t doing temp workers any favors, either. Companies may become reluctant to hire workers via temp agencies, for fear of triggering joint employer liability. Instead of using temp workers during peak season, large companies may just ask employees to work overtime or simply do less business.
The bad consequences stretch out over the long run, as well. Placement by a temp firm at a company provides on-the-job training, which provides the individual with marketable skills and a better opportunity to secure full-time employment. Further, the American Staffing Association finds that 35 percent of these temp staffers are offered a permanent job by a company where they were assigned.
Congress has a golden opportunity to stop the NLRB’s joint employer standard from wreaking havoc on job creators. They even have a modicum of bipartisan support. Rep. Henry Cuellar (D-Texas) is the Congressperson calling for a rider to defund the joint employer standard be included in the Labor, Health and Human Services, Education, and Related Agencies appropriations bill. It’s time for Congress to step up.
Originally posted to The Hill.