The National Labor Relations Board reversed an Obama-era ruling Thursday that had made employers potentially liable for labor-law violations committed by their subcontractors.
Now with a 3-2 Republican majority under President Trump, the board overruled its previous decision in a case from 2015 known as Browning-Ferris, calling the earlier ruling “a distortion of common law.”
Two years ago, the NLRB overturned long-established guidelines that said a company must have direct control over the actions of a subcontractor or franchisee’s employees in order to be considered a joint employer.
In its ruling on Thursday, the board said the earlier decision had prevented the NLRB from “discharging one of its primary responsibilities … which is to foster stability in labor-management relations.”
Mr. Trump’s new appointees, Marvin Kaplan and William Emanuel, voted with outgoing board Chairman Philip Miscimarra, whose term expires on Sunday. Democratic members Mark Gaston Pearce and Lauren McFerran dissented.
The National Retail Federation praised the decision.
“The board’s 2015 decision created an impossible scenario where one business could unfairly and improperly be held accountable for the actions of another business,” said NRF senior vice president David French. “Today’s vote puts an end to those harmful and unnecessary changes that exposed companies to almost limitless liability. This is an important move to restore the common-sense definition of what constitutes this type of employment relationship that stood for decades.”
The National Restaurant Association also applauded the move.
“The 2015 Browning-Ferris ruling stacked the deck against small businesses and inserted uncertainty into day to day operations,” said Cicely Simpson, the group’s executive vice president of public affairs. “Today’s decision restores years of established law and brings back clarity for restaurants and small businesses across the country.”
The free-market Competitive Enterprise Institute called the ruling “a crucial victory for entrepreneurs and workers nationwide” that overturned the “infamous joint employer case that threatened to ensnare countless American businesses in vast but vague new employer liability.”
“The vague and expansive joint employer standard implemented by the Obama administration needlessly restricted business-to-business relationships, hindered worker opportunities and entrepreneurship, and exposed tens of thousands of employers to increased costs and liability,” said CEI labor policy expert Trey Kovacs. “Today’s ruling restores the common sense definition of joint employer.”
Mr. Kovacs said Congress now has a duty to approve a law perpetuating the board’s ruling.
The House passed legislation in November to overturn the NLRB’s 2015 ruling and change the definition of an “employer” in the National Labor Relations Act and the Fair Labor Standards Act.
• Dave Boyer can be reached at dboyer@washingtontimes.com.
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