Labor Department withdraws joint employer liability guidelines set under Obama
The National Retail Federation welcomed the announcement from the Labor Department that it would withdraw burdensome guidance issued under the Obama Administration significantly broadening the definition of a joint employer and creating seemingly limitless liability in business to business relationships.
“Today’s announcement from the Labor Department is an important first step in reversing one of the most onerous regulations imposed by the previous administration on businesses,” NRF President and CEO Matthew Shay said. “Drastically expanding joint employer liability to hold one business responsible for the actions of another independent business, such as a subcontractor or franchisee, did nothing to protect employees and only created uncertainty that led to more growth-chilling litigation. Retailers hope Congress will build on this progress and put the issue to rest once and for all with clear, fair legislation defining joint employers.”
Guidelines released in January 2016 by the Labor Department’s Wage and Hour Division set a broader definition of what could be considered a joint employer. Similarly, in an August 2015 ruling involving the waste management company Browning Ferris Industries and staffing agency Leadpoint Business Services, the National Labor Relations Board said a company could be considered a joint employer even if it had only indirect or unexercised control. In a separate case, the NLRB said McDonald’scould be considered a joint employer with its restaurant franchisees. Under guidelines followed for more than 30 years before the ruling, the NLRB held that a company had to have direct control over the actions of a subcontractor or franchisee’s employees in order to be considered a joint employer.
NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.