U.S. Labor Board Seeks to Expand Liability for Company ‘Co-Employers’

The rule proposed by the National Labor Relations Board would treat companies as so-called “joint employers” when they have indirect control over terms and conditions of employment such as rosters, hiring and firing, and the surveillance.

Joint working has been one of the most contentious labor issues for many U.S. companies since the Obama administration, when the NLRB approved a similar standard that trade groups said was unworkable and would limit franchising.

A rule passed under the Trump administration requires companies to have “direct and immediate” control over contract and franchise employees in order to be considered co-employers. Tuesday’s proposal would repeal this 2020 rule favored by business groups.

The new proposal would have far-reaching implications for industries such as manufacturing and construction, which rely heavily on recruitment agencies and contractors for their workforce, and for franchise companies such as McDonald’s Corp., who are not usually involved in daily life. day-to-day work problems of their franchisees. .

The NLRB will formally announce the proposal on Wednesday, including a 60-day period for public comment. A final rule is expected to be adopted next year.

NLRB Chair Lauren McFerran, a Democrat, said in a statement that the proposed rule was necessary to protect workers’ rights as labor relations become increasingly complex.

A company that happens to be a joint employer would likely be required to focus more on setting and implementing workplace policies, and may be required to negotiate with unions.

The rule, if enacted, would severely restrict the freedoms of many small business owners, said Elizabeth Milto, acting executive director of the legal arm of the National Federation of Independent Businesses, a lobby group.

“This move could have the effect of robbing smaller independent franchisees of their employment decisions and leaving those decisions in the hands of larger corporations,” Milto said.