The Save Local Business Act
On November 7, 2017, the U.S. House of Representatives passed a bill to restrict the definition of joint employer under the National Labor Relations Act (“NLRA”) and the Fair Labor Standards Act (“FLSA”). The bill, boldly named the “Save Local Business Act” (H.R. 3441), would amend the National Labor Relations Act and the Fair Labor Standards Act. It would limit liability as a joint employer to those situations where the alleged joint employer “directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment.”
The three key words here are “directly, actually and immediately.” This constrictive language is favorable to business interests, and differs from appellate court decisions regarding joint employer status.
It’s About Time
H.R. 3441 was introduced in the House in late July 2017, over thirty years after the Third Circuit’s opinion in NLRB v. Browning-Ferris Indus. of Penn., Inc. In a nutshell, the controversial Browning-Ferris rule is that “significant control” over the same employees is enough to establish that two entities are joint employers. Companies and courts have been arguing about “significant control” ever since. In a 2015 case by a similar name, Browning-Ferris Industries of California, Inc. v. NLRB, the Board redefined “joint employers” as “two or more entities” who (1) are both employers “within the meaning of the common law,” and (2) “share or codetermine those matters governing the essential terms and conditions of employment.” This new standard did not put the debate to rest. In March 2017, the D.C. Circuit heard oral arguments in the appeal of Browning-Ferris California, with no judgment yet.
It’s Not Over Yet
It remains to be seen whether the Senate will take up the Save Local Business Act, or if it will die en route from the House. Meanwhile, we will watch for the D.C. Circuit’s decision in Browning-Ferris California, and any subsequent request for appeal to the U.S. Supreme Court.
What Reed Smith Can Do For Your Business
Even if the pending bill does become law, HR 3441’s definition of “joint employer” will still be subject to interpretation. When drafting contracts to engage contracted workers, Reed Smith can help your company understand how those terms and conditions may implicate the FLSA and NLRA. Reed Smith will analyze your business structure to reduce the risk of litigation by setting clear guidelines about how temporary employees are managed and supervised. If you do become the object of a claim based on the “joint employer” theory, Reed Smith regularly and successfully defends against those types of claims.
Client Alert 2017-277
