Employers and Contractors: Impact of “Joint-Employers” Ruling
Despite objections from a variety of business groups, including the International Franchise Association, congress did not take action to delay the National Labor Relations Board (NLRB) “Joint-Employers” ruling. The ruling places responsibility for labor practices, wage and hour rules and labor negations on both companies supplying contract employees and companies utilizing contract labor. If you employ contract workers or you are a contract worker it is important that you understand the implications of the new NLRB rule.
What is changing?
In the past a company would only be considered an employer or a joint-employer if they had direct control over employee pay, hours and conditions. The lines between employer and contractor have blurred in recent years as more and more businesses began to rely on workers hired by outside staffing companies. Under the previous standard, these staffing companies were the sole employer responsible for hiring, firing and compensating the employees.
The new standard defines the business contracting with the staffing company as a joint-employer if they have the ability to influence the terms and conditions of employment. The NLRB will use the new standard to evaluate whether a company has exerted influence over employment matters directly or indirectly, or if a company maintains the right to influence the employment terms or conditions.
How might the NLRB ruling affect small businesses?
Previously, franchisees were responsible for hiring, firing, discipline and compensation of their employees. The ruling means franchisors, with increased liability in employment matters, may exercise greater control in employee matters. This could mean additional oversight of franchisees or new standards for pay. Franchisors may also now be directly responsible for negotiations with unions representing franchisees’ employees.
Contract employees themselves and the companies which contract with those employees may also see changes due to the ruling. Companies that benefited from the previous definition of joint-employer may reconsider the value of using contract labor. In addition, contract employees may have a new avenue for settling employment disputes.
Click here to read the full NLRB decision. If you have any questions or need more information on employment law, call your LegalShield provider law firm and speak with an attorney to learn more.