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Paul Zimmerman
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Seminal NLRB Decision Redefines Joint Employer Liability

In a highly anticipated decision, the National Labor Relations Board (NLRB) handed down a ruling today that companies can be held responsible for violations of labor standards committed by their contractors. At issue was whether a waste management firm (Browning-Ferris) could be held responsible for treatment of its contract employees (provided by staffing company Leadpoint Business Services). In stark contrast to previous labor law decisions of the past 35 years, the NLRB held that Browing-Ferris should be treated as a joint employer.

In recent decades, companies have generally been held responsible only for employees who are under their direct control by setting their hours, wages, or job responsibilities. Companies could avoid liability by hiring staffing agencies and subcontractors that deal more closely with the workers. Under the new standard, a company could be considered a joint employer even if it has only indirect control over working conditions. The ruling seeks to redefine what constitutes an “employer” in the U.S. and could have major implications for a vast number of industries including staffing, hospitality, retailers, manufacturers, and cleaning services. The NLRB’s decision will make it easier for labor unions to negotiate directly with franchisor corporations like McDonalds, rather than individual restaurant franchisees. It won't be surprising if corporations begin severing ties with contractors in efforts to retain more control. 

This article is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.