A Competitive Enterprise Institute report released today reveals a set of unexpected liabilities American businesses and employers will face in the wake of recent changes to labor rules by the Obama administration’s National Labor Relations Board (NLRB).
“The Obama joint employer rules will mean greater uncertainty and exposure to liability for businesses already trying to weather tough economic times,” said Trey Kovacs, CEI policy analyst and author of the report. “Many businesses will be surprised to find out that settling disputes with labor regulators or setting well-intentioned employment standards for contractors or franchisees, like paid leave or child care, may make both sides liable for labor disputes. It seems no good deed goes unpunished.”
Under the reworked “joint employer” standards, a business and its contractor or franchisee may be held jointly responsible for labor violations and collective bargaining. The report explains how implementing a supplier code of conduct or settling a labor dispute with the U.S. Department of Labor may vastly expand the liability of both the business and its contractor or franchisee.
For example, Microsoft is embroiled in a case before the NLRB involving one of its suppliers. The case arose after a labor union alleged Microsoft’s supplier code of conduct, which requires contractors provide employees 15 days of paid leave, establishes joint employer status. That supplier code of conduct, Microsoft says, has led “to substantial and growing legal expenses and great uncertainty.”
That new liability is at odds with decades-long labor rules that required much more direct control by businesses over work conditions like hiring, supervision, and wages to determine joint employer status. August marks the one-year anniversary of the new rules, put forward by the NLRB ruling against Browning-Ferris Industries. The NLRB is prosecuting cases against a handful of companies aimed at expanding joint employer liability.