What do Changes to New Hampshire’s Joint Employment Law Mean to You?

Changes in New Hampshire’s joint employment law can be traced to July 2017 when Governor Chris Sununu signed Senate Bill 89, an act relative to the relationship between a franchisor and a franchisee, into law.  The bill adds one key sentence to the definition of “employer” as used in RSA 275-4, I, to specify that “A franchisor is only an employer if the franchisor agrees in writing to assume the role of employer or co-employer of the franchisee or the employee of the franchisee.”  Essentially, the bill means that in order for a franchisor to be liable for labor violations, it must agree in writing to be considered the employer of the franchisee or of the franchisee’s employees.

The legislation appears to be in response to the controversial Browning-Ferris decision from 2015 in which the National Labor Relations Board (NLRB) revised the decades old test for joint employer liability.  In its holding, the NLRB expanded who may be liable for labor violations under the National Labor Relations Act (NLRA) and the Migrant and Seasonable Agricultural Worker Protection Act (MSPA) by no longer requiring direct control over an employee’s terms and conditions of employment.  Instead, under Browning-Ferris, an employer may be liable as a “joint employer” even though it only maintains indirect control, such as through an intermediary or by a reservation of rights, of an employee.  Joint employment relationships often come up in the context of franchises, sub-contractors, and staffing agencies.

Under the Obama administration, other federal agencies, including the Equal Employment Opportunity Commission (EEOC), followed suit after Browning-Ferris and adopted broader standards for determining if a joint employment relationship exists.  However, in June 2017, under the Trump administration, the U.S. Department of Labor rolled back its expansion by withdrawing its prior informal guidance on the issue.

While New Hampshire has taken steps to narrow the scope of joint employer liability at the state level by adopting Senate Bill 89, the issue is still contentious and undecided as the Browning-Ferris decision is still on appeal at the D.C. Circuit.  Whether an employer is considered a joint employer can have major ramifications for liability purposes.  Employers in New Hampshire seeking to avoid joint employer liability should remain diligent and continue to ensure their employment contracts clearly identify the employer, state that a joint employment relationship is not created, and assign control of employees by describing the rights and duties of the parties with specificity.  Given the complexities and uncertainty surrounding the issue, employers would be well-advised to seek legal counsel when drafting such employment contracts.

For questions contact:  Lindsay E. Nadeau, Esq., lnadeau@orr-reno.com

About the Author: Lindsay E. Nadeau

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