Hunton Employment & Labor Perspectives

Dozens of business groups submitted comments on December 7 to oppose the National Labor Relations Board’s proposed joint employer rule, arguing it would interfere with business-to-business contracting and needlessly entangle companies in collective bargaining negotiations related to employees they do not control.

The proposed rule, which was covered in a previous blog post, would dramatically expand the types of relationships that could create a joint employment relationship under the National Labor Relations Act.  The Board’s current rule, enacted less than three years ago, requires an employer to actually exercise direct and immediate control over essential terms of employment to qualify as a joint employer.  Under the proposed rule, the Board could find a joint employer relationship based on contractual terms that grant a secondary employer a right-to-control employment terms, even if that right is never exercised.  They would also allow a joint employer finding if a putative joint employer exercises indirect control over even a single term of an employee’s employment.

Hunton Andrews Kurth drafted a comment on behalf of the National Retail Federation (NRF).  The comment can be found here.  In it, NRF states the proposed rule would harm retailers because it would disincentivize business-to-business cooperation and decrease specialization.  NRF disagreed with the Board’s position that the proposed rule was consistent with Board precedent and common law, and argued that continued flip-flopping by the Board, by changing a core standard like the joint employer rule less than three years after passing its current rule, endangered the Board’s legitimacy and future rulemaking ability.

More than 60 business groups filed similar comments, including the U.S. Chamber of Commerce, the Coalition for a Democratic Workplace, and the International Franchise Association.