NCPA - National Center for Policy Analysis

Labor Unions and the Joint Employer Rule

June 30, 2016

Two significant rulings by the National Labor Relations Board in 2015 expanded the longstanding interpretation of "joint employment," a designation given when two firms are involved in directing, controlling, training and supervising an employee. The NLRB is a politically appointed board that governs employer relations with labor unions, but its new interpretation of joint employment will have the greatest effect on small businesses.

The impetus for the rule is the desire to ease unionization of small businesses that are franchisees of corporations, such as restaurant and retail food chains.

In a 2015 case involving Browning Ferris Industries, the NRLB ruled that Browning Ferris was not only responsible for those it employed directly, but also for contractors and those "indirectly" employed by the firm. Thus, it would be liable for labor violations committed by contractors, even when it has only indirect or "potential" control over employment conditions. In another case, involving McDonald's Corporation, the NLRB ruled that McDonald's is a joint employer and therefore could be responsible for alleged labor and anti-discrimination law violations at its franchises in 30 locations across five states.

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