Still Confused About the Joint Employer Rule?  You’re Not Alone.

In 2017, the U.S. Department of Labor announced that it was rolling back the Obama administration’s expansion of the joint employer rule to much applause by the business industry.  In June 2017, Secretary of Labor Alexander Acosta announced the withdrawal of the Department’s 2015 and 2016 informal guidance on joint employment and independent contractors.  While the announcement reiterated that removal of the guidance does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, many saw the move as an indication of the Trump administration’s preference for business-friendly regulation.

So why is this important?  Recall that in 2015 and 2016, two Wage and Hour Administrator’s Interpretations (AIs) expanded the scope of what constitutes joint employment and thereby expanded potential liability of employers engaged in such relationships.  Administrator’s Interpretation No. 2016-01 established a new standard for determining whether a joint employment relationship exists under the Fair Labor Standards Act and the Migrant and Seasonable Agricultural Worker Protection Act.  It provided that “[t]he concept of joint employment, like employment generally, should be defined expansively.”  Likewise, AI No. 2015-1 took an expansive view of when independent contractors may be considered employees under the Fair Labor Standards Act.

In line with these Interpretations, in August 2016, the National Labor Relations Board issued a controversial decision holding that Browning-Ferris Industries of California was a joint employer of the workers supplied by its temporary staffing agency.  In the Browning-Ferris decision, the NLRB expanded the test for analyzing joint employment from one that focused on direct control to one centered upon indirect control.  This expanded, and muddied the already murky, standard for who will be considered a joint employer of workers, and subsequently, who may be responsible and liable for protecting those workers under federal law.

More recently, in February 2018, the National Labor Relations Board fell in line with the Trump administration’s position and overruled the “indirect control” standard when deciding Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017).  The Hy-Brand ruling was applauded by many in the business industry as a clear sign that the Obama-era expansion was finally reversed.  But, just this February, the NLRB vacated its Hy-Brand decision due to a conflict of interest involving a board member.  Because the NLRB’s decision in Hy-Brand has been vacated, its overruling of Browning-Ferris is now of no force or effect.  Many in the business community are pushing for a legislative fix once and for all.  Legislation to repeal the Browning-Ferris broader definition of joint employment is slowing making its way through Congress, although its passage is uncertain.  As an employer, it is important to keep the status of this definition in mind.

While there has been little guidance from the Department of Labor regarding joint employment under the Occupational Safety and Health Act, some recent actions by the Occupational Safety and Health Administration (OSHA) suggest an expanded view of joint employer liability, including in the construction industry.  Employers have seen an increase in citations for alleged violations of the OSH Act for conduct by subcontractors, independent contractors and staffing agencies.  For example, a host employer may be cited if the staffing agency fails to perform proper training.  Further, under OSHA’s recordkeeping rule, only the host employer of temporary workers is responsible for reporting the worker’s injury or illness on its Form 300.

It is unknown whether the Trump administration’s recent rollback will curb OSHA’s expanded view on joint employer liability.  This is just one of many rollbacks by the Trump administration that will impact OSHA’s regulatory agenda.  Other recent suspended rules include provisions regarding construction noise, combustible dust exposure, vehicles driving in reverse at factories and construction sites and chemical exposure standards.  Employers and workers alike should stay apprised of the changing landscape to ensure compliance.

About the Author: Lindsay E. Nadeau

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