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Proposed Legislation Could Make It Harder to Establish Joint Employer Liability

The issue of joint employer liability is always a tricky one. One very common situation that brings issues of joint employment to the forefront is when an employee receives a paycheck from one business but works at the site of another business. This usually happens when there is a contract between the two businesses to provide workers on a job site or when a staffing agency provides employees for a business.

Understanding the “Joint Employer” Doctrine

The “joint employer” doctrine is a legal theory that permits courts and regulatory agencies to treat multiple businesses as a single or “joint” employer when it comes to applying and enforcing employment laws. An obvious benefit of establishing a joint employer relationship is that the employee may be able to pursue his or her claims against both “joint” employers.

Another situation where joint-employment status becomes important for both employers and employees is when calculating hours for overtime. Potentially, if a joint employer relationship can be established between two related entities and an employee has worked more than 40 hours a week combined, then overtime pay is required. However, new federal legislation has been introduced that would make it more difficult to establish this relationship for purposes of wage and hour violations.

Legislation Proposed by House Member from Alabama

A new bill, Save Local Business Act (H.R. 3441), was proposed by Rep. Bradley Byrne (R-Alabama) and passed in the House. The bill would amend the National Labor Relations Act and the Fair Labor Standards Act to narrow the definition of joint employment under these statutes. Specifically, under the bill, businesses will not be considered joint employers unless they exercise direct, actual and immediate “significant control” over the essential terms and conditions of the employees at issue. The essential terms and conditions will include hiring, termination, discipline, establishing pay and benefits, daily supervision of employees, assignment of individual work schedules and assignment of job duties.

Mixed Feelings About the Effectiveness of the Proposed Bill

Proponents of businesses and employers see the proposed legislation as giving them bright-line rules that can be followed when entering into agreements with contractors, for example. On the other hand, advocates for employees see this as a way for employers to outsource labor and avoid liability for subsequent illegal conduct or statutory violations. One thing that can be agreed upon is that this bill, if enacted, will create a much stricter standard that set forth in a controversial National Labor Relations Board (NLRB) decision in Browning-Ferris Industries of California.

The Expected Impact on Low-Paid Workers

Employee advocates expect that this statute, if enacted, will have a seriously adverse impact on lower paid employees, such as those working in agriculture and janitorial services. Specifically, the bill will make it simpler for employers to erect barriers between themselves and their
employees by using staffing agencies to avoid liability. Others have gone so far as to say the proposed law would “undermine the concept of joint employment” and “set a high threshold to hold an employer who contracts or outsources work” liable for workplace law violations.

If you feel you have been the victim of discrimination or retaliation in the workplace, or if you have any other questions regarding your employment rights, please contact the experienced Birmingham employment law attorneys at Wrady & Michel, LLC. You can contact us either online or by calling us at (205) 265-1880. We are here to serve you!