Generally speaking, joint employment, or co-employment, is the sharing of control and supervision of an employee’s activity among two or more business entities. A benefit of the increasingly popular employment practice is the ease with which joint employers are often able to hire experts in niche industries, individuals with specialist skills, and/or even replace their regular workforce. Currently, however, no single legal definition of joint employment exists and Congress is out to change that.
A handful of congressmen feel that the shift from a direct-control test to an indirect-control test (which took place under the Obama Administration in the NLRB’s 2015 Browning-Ferris decision) made it too easy for franchisors and franchisees to become joint employers, thereby “presenting obstacles to companies trying to expand or stay afloat.” As a result, they hope to narrow and clearly articulate what it means to be a joint employer.
As noted earlier, the definition of joint employment under the 2015 Browning-Ferris decision expanded greatly. Indeed, now all businesses with indirect control over other entities are joint employers, in direct contradiction to the traditional definition of joint employers as businesses with direct control over other entities causing some confusion and financial strain among small businesses. Hoping to bring the old understanding of joint employment back, and at the same time, some relief for small business owners, Congress is stepping in.
According to the Congressmen involved, “for 30 years, since the establishment of the traditional definition of joint employer, business owners and attorneys thought they knew what they needed to do to become someone’s employer. There had to be direct control. From an employee’s standpoint, the person who signed the paycheck and told the employee what to do every day was the employer.” This changed under Browning-Ferris. Side note: the case is also on appeal to the U.S. Circuit Court of Appeals for the D.C. Circuit, so regardless of the political movement, the courts will have an opportunity to weigh in.
For more information on this bill and others relevant to your small business, contact experienced business attorney Drew E. Pomerance today.