Alexander Statement on National Labor Relations Board Final Joint Employer Rule

WASHINGTON, February 25, 2020 — Senate Labor Committee Chairman Lamar Alexander (R-Tenn.) today released the following statement on the National Labor Relations Board’s (NLRB) final rule on the joint employer standard:

 “The NLRB’s final rule is positive news for the men and women operating our nation’s 733,000 franchise establishments. It returns to the standard that for decades required that for a business to be considered a ‘joint employer,’ it must actually exercise direct control over employees’ terms and conditions of employment. The Obama-era NLRB’s expansion of the ‘joint employer’ standard said that mere unexercised or indirect control over employees’ working conditions could make a franchisee and franchisor joint employers—discouraging large companies from franchising at all. The NLRB’s new rule provides clarity and predictability and helps protect this important path to the middle class for small businessmen and women across the country.”

 Background:

·        A decision by the Obama-era NLRB on a case in 2015 changed the standard so that just unexercised or indirect control over the employees’ terms and conditions of employment could serve as the basis for finding a joint employer relationship. Under the 2015 standard, companies can find it much more practical to own all their stores and restaurants and day care centers themselves, rather than encourage more franchisee-owned small businesses. 

·        Alexander fought the NLRB’s joint employer decision since 2015, when he introduced legislation to overturn the Obama-era standard. He has held hearings on the joint employer decision, and oversaw the confirmation of three new Republican NLRB members.  

·        The final rule states that to be a joint employer, a business must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees. The rule also clarifies that control exercised on a sporadic or isolated basis is not “substantial.”