The “Save Local Business Act” — recently introduced in the U.S. House of Representatives — would provide much-needed clarification on the circumstances under which an entity can be liable as a joint employer under two federal labor and employment statutes.
If passed, the legislation would amend both the Fair Labor Standards Act and the National Labor Relations Act to specify that a joint employment relationship will exist under either act only if a putative employer “directly, actually and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment (including hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions and tasks, and administering employee discipline).”
The bill comes as a response to the continued expansion of the “joint employer” doctrine by both the federal courts and administrative agencies. Currently, there is no uniformity in the joint employer tests utilized by the different circuit courts in evaluating FLSA claims, rendering it nearly impossible for entities to understand their obligations — let alone take the proper steps — to avoid liability as a joint employer. The situation was further complicated by the recent U.S. Fourt Circuit Court of Appeals decisions in the companion cases of DirecTV and Salinas by holding that an entity will be considered a joint employer for FLSA purposes if it is “not completely disassociated” from the direct employer. (Best Best & Krieger recently submitted an amicus brief to the United States Supreme Court in the DirecTV case on behalf of the International Franchise Association, American Hotel and Lodging Association, Asian American Hotel Owners Association, Coalition of Franchisee Associations and Restaurant Law Center in support of a providing a uniform joint employer standard.)
Another expansion of the joint employment doctrine can be found in the 2015 Browning-Ferris decision of the National Labor Relations Board. In Browning-Ferris, the NLRB deviated from its decades-old precedent that an entity must exert “direct and immediate control” over an employee’s terms and conditions of employment to hold that a joint employer determination is appropriate where it has reserved authority to exert such control — even if that control is never actually exercised.
While this proposed legislation would create some consistency across joint employer standards under two major labor and employment laws, it still fails to address the joint employment determinations under Title VII of the Civil Rights Act, the Family and Medical Leave Act, the Americans with Disabilities Act and several other statutes. It is also important to note that the future of the bill is far from clear.
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