Bill to change joint-employer definition advances in House

Legislation to repeal an Obama-era National Labor Relations Board ruling that made companies and franchisors potentially liable for labor law violations committed by their subcontractors or franchisees advanced in the House on Tuesday.

The House Education and the Workforce Committee voted 23 – 17 to send the Save Local Business Act bill to the floor for a full vote.

The legislation would rescind the National Labor Relations Board’s (NLRB) 2015 ruling that redefined a joint-employer. The board ruled that a company is considered a joint-employer with a subcontractor if it has “indirect” control over the terms and conditions of employment or has the “reserved authority to do so.”

{mosads}The bill’s author, Rep. Bradley Byrne (R-Ala.), claims that definition was too vague and has created confusion among employers, discouraging business growth due to the increased threat of litigation.

“As a former labor attorney, I can tell you it used to be pretty clear who an employer was, but now two completely separate employers can be considered joint-employers if they make a business agreement that indirectly or even potentially impacts employees,” he said.

Under the Byrne’s bill, a company would only be considered a joint-employer with its subcontractor if it “directly, actually and immediately exercises significant control over essential terms and conditions of employment, such as hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions and tasks or administering employee discipline.”

Republicans claim businesses are struggling under the current standard.

“We wouldn’t be here if there wasn’t an overwhelming consensus that the NLRB and Obama-era bureaucrats made serious mistakes,” Committee Chair Virginia Foxx (R-N.C.) said.

Democrats, however, claim the legislation would make it harder for workers to fight back against unfair labor practices because it changes the definition of a joint-employer under the National Labor Relations Act as well as the Fair Labor Standards Act (FLSA), which establishes minimum wage, overtime pay, recordkeeping and child labor standards.

“This bill has more flaws than I care to list, but one of my biggest concerns is that it will make it harder for many workers to bring Equal Pay Act claims,” said Rep. Susan Davis (D-Calif.).

Davis said the same joint-employer standards would apply because the Equal Pay Act is part of FLSA.

Republicans voted down amendments offered by Democrats, including one introduced by Rep. Jared Polis (D-Colo.) to rename the bill the “Wage Theft Immunity Act.”

Polis called the bill a “road map for employers to prevent themselves from being held responsible for wage theft.”

Polis cited a recent study from the Economic Policy Institute that found 2.4 million workers in the 10 most populous states lost $8 billion annually for minimum wage violations alone.

“Clearly there’s not enough incentive already for employers to follow our existing law,” he said. “The last thing we need is another loophole to avoid the law.”

Byrne pushed back, claiming his bill does nothing to change current laws that prevent wage theft.

“The amendment’s assumption is that businesses are looking for a way to evade their responsibilities to workers,” he said. “I reject that assumption … The underlying bill does not take away a single protection from a single worker in the United States of America. It only defines joint-employer relationships.”