House Panel Advances Bill to Clarify Joint Employer Standard

Following a series of congressional hearings on the National Labor Relations Board's Browning-Ferris decision, the House Committee on Education and the Workforce voted on Wednesday to advance a bill that would effectively reverse the Board's action in that case. The Committee voted 21-15 along party lines to send the Protecting Local Business Opportunity Act (H.R. 3459) to the House floor. This legislation rejects the new joint employer standard the Board adopted in Browning-Ferris, and clarifies that two or more employers must have “actual, direct, and immediate” control over employees to be considered joint employers for liability purposes under the National Labor Relations Act.

Under the new standard adopted in Browning-Ferris, demonstrating an entity's "indirect control" or even its "unexercised potential to control" another entity's employees could establish joint employment. According to Committee Chairman John Kline (R-MN) during the bill markup session, Browning-Ferris greatly expands joint employer liability, and will leave franchisors "no choice" but to demand a greater role in how their franchisees operate. H.R. 3459 "rolls back a partisan decision" by the Board, and will reinstate the standard used to determine joint employment that has been in place for the past 30 years, Kline said.

The Committee approved a slightly amended version of the bill introduced by Rep. Buddy Carter (R-GA), which makes a technical correction to the original bill.  The short measure would make the following change to the NLRA:


Section 2(2) of the National Labor Relations Act (29 U.S.C. 152(2)) is amended by adding at the end the following: ‘‘Notwithstanding any other provision of this Act, two or more employers may be considered joint employers for purposes of this Act only if each employer shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.’’

As expected, several Democratic members of the Committee voiced opposition to the bill. Rep. Mark Takano (D-CA) claimed the legislation would "undermine decades of common law," and serve as a "blunt response to a nuanced issue." Rep. Suzanne Bonamici (D-OR) argued that the common-law definition of employer has been effective, and that the NLRB will use a case-by-case basis to evaluate joint employment following Browning-Ferris.

In contrast, Rep. Rick Allen (R-GA) said he heard from several franchises that said they will not be able to expand their business under this new joint employer standard.

As part of the bill markup process, many Democratic members attempted to include amendments to the bill, all of which failed to advance on procedural grounds.  In essence, Chairman Kline ruled that the substance of each amendment offered was beyond the original bill's scope, and therefore violated House rules.  The amendments offered were notable, however, in that they feed into the "middle class economics" theme that will endure into the 2016 elections. Each amendment offered would have stripped the text of the Protecting Local Business Opportunity Act and replaced it with the following previously-introduced measures:

  • Equality Act (H.R. 3185), which would amend federal employment law to prohibit employers with 15 or more employees from discriminating based on sexual orientation or gender identity. Rep. Jared Polis (D-CO) offered this amendment, noting that such employment discrimination is still legal in 31 states.
  • Workplace Action for a Growing Economy (WAGE) Act (H.R. 3514), which would greatly expand the remedial scope of the NLRA. Rep. Mark Pocan (R-WI) introduced this amendment.
  • Payroll Fraud Prevention Act of 2015 (H.R. 3427), a bill that would make a number of amendments to the Fair Labor Standards Act to require employers to delineate employees from non-employee contractors, impose additional employer reporting requirements, and establish new penalties for misclassification violations. Rep. Frederica Wilson (D-FL) introduced this amendment.
  • Schedules that Work Act (H.R. 3071), which would entitle most employees to request changes to their work hours, locations, and advance notice of on-call time, and prevent employers from retaliating against employees that make such requests. The bill would also require covered employers to engage in a good-faith interactive process to consider and respond to schedule change requests, and require employers to provide certain hourly workers in the food service, cleaning, and retail industries two weeks' advance notice of their work schedules, among other provisions.  Rep. Rep. Bonamici introduced this amendment.
  • Paycheck Fairness Act (H.R. 1619), which would expand damages available under the Equal Pay Act (EPA) to include potentially unlimited compensatory and punitive awards for wage discrimination; weaken an employer’s ability to raise the “factor other than sex” affirmative defense in a wage discrimination case; ease the requirements for bringing a class action lawsuit under the EPA; make it unlawful for an employer to prevent employees from discussing or comparing salaries; and impose additional compensation reporting requirements on employers. Rep. Katherine Clark (D-MA) introduced this amendment.

While none of the above bills are expected to move as either standalone legislation or as amendments to other bills this Congress, lawmakers will continue to push them through the election cycle.

As for the Protecting Local Business Opportunity Act, it will now move to the House floor for a vote, where it will likely be approved, and efforts to attach the bill to other legislation will also likely continue.   

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.