June 26, 2018

John Ring Completes NLRB and Announces Joint Employer Plans

After a quiet start to the year, the National Labor Relations Board (NLRB) and its new chairman, John Ring, are now making strides to change the labor laws in favor of employers. One key development is its announcement that the NLRB will engage in rulemaking to modify its joint employer standard.

Why Joint Employer Status Matters

The NLRB determines when two employers acting together are “joint employers.” Once employers are joint employers, the NLRB can prosecute and penalize both for violating the labor laws. These laws apply to unionized and non-union employers alike. Plus, if one of the employers is unionized, the NLRB can require that the other bargain with the union, too. The joint employer designation leaves both organizations vulnerable to strikes, picketing and other economic protest activity from unions.

Recent Shifts in the Joint Employer Standard

In 2015, a Democrat-majority NLRB loosened its joint employer standard, making it easier to regulate a second employer as joint employer of the first. By 2017 the composition of the NLRB had shifted to a Republican majority, which overturned that decision, reverting to a tighter standard. Employers assumed that they would be judged by this tighter standard for years, at least until Democrats controlled the NLRB again. But in a surprise twist, in early 2018 the NLRB rescinded its recent decision because of ethics concerns. (One of the Republican appointees who participated in the 2017 decision was formerly a partner at a law firm that represented one of the parties in the 2015 joint employer case.)

The Latest Twist

In April 2018, John Ring assumed the post of NLRB chairman against that backdrop of uncertainty. A few weeks later, the NLRB announced that it was considering changing the joint employer standard again, not with a new decision, but by issuing a new rule. The NLRB has both options available to it, but rarely uses rulemaking. Usually, the NLRB changes labor laws like a court, interpreting the law in particular cases. In rulemaking the NLRB acts more like a legislature. To change the joint employer standard through rulemaking, the NLRB must follow a long process requiring it to solicit and consider public comment on its proposed rule. However, if successful, the new rule will set a new (presumably employer-friendly) joint employer standard that is more comprehensive and permanent than a standard created through an NLRB decision.

Meanwhile, Congress is considering using its higher authority to roll back the 2015 joint employer standard. Last November the House voted to do so, and the Senate is considering a similar measure.

For now, employers should assume that the NLRB will judge them by the looser 2015 joint employer standard. But they should keep an eye on Congress and the NLRB’s rulemaking efforts. Beyond that, once the NLRB proposes its new rule in detail, employers who suspect they would be significantly impacted by it should also consider submitting comments on it. Historically, employers have commented individually or through their trade associations, and the NLRB has modified its proposed rules to take their concerns into account. By doing so here, employers can help ensure that the new rule works for them.

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