Policy Matters Newsletter - September 9, 2022

NLRB Proposes New Rulemaking On Joint Employment. The standard for determining joint  employment for purposes of the National Labor Relations Act is primed to increase exposure for employers, especially employers with alternative staffing arrangements.

The test for determining joint employment has percolated in employment news since the Obama administration, and the controversy over that standard continues as the current NLRB has issued a Notice of Proposed Rulemaking that “proposes to rescind and replace the final rule entitled ‘Joint Employer Status Under the National Labor Relations Act,’ which was published on February 26, 2020 and took effect on April 27, 2020.” The proposed rule would establish two or more employers as joint employers if they “share or codetermine” key employment conditions — such as pay, scheduling, workplace safety and employee discipline policies. This rule would decrease predictability and regresses the standard to a test more akin to the common law test.

In 2015, the NLRB issued a decision in Browning-Ferris Industries of California, Inc., holding that an employer need only have the contractual right to control an employee’s working conditions – whether or not such control is ever exercised – in order to be classified as joint employer for NLRA purposes. The case went through the appeals process and by the time it got back to the NLRB in 2020, the administration, and the composition of the NLRB, had changed and it overturned the previous decision and issued a new standard for joint employment, requiring “substantial direct and immediate” control. Not only did the Trump-era NLRB overturn the previous ruling, it also issued its own rulemaking mostly tracking the new standard, permitting a finding of joint employment only if the two share or codetermine the employees’ essential terms and conditions of employment.

That decision was also appealed, and once again the D.C. circuit remanded to the NLRB – again with a new composition under a new administration – holding that the board “made multiple overlapping errors.” As such, before the final rule can be promulgated, the NLRB may issue a fresh opinion on the standard.

Whether through the new proposed rule, or through NLRB decision making, employers should brace for a significantly revised rule that will make it easier to find joint employment, easier  than even the relatively lax standard established during the Trump administration in Browning-Ferris II. Stay tuned. 

California Wraps Up 2022 Legislative Session. Every year, at the end of August, the California legislature enters a mad dash to pass bills before each summer’s legislative deadline, and this year was no different. Also not different this year is the load of significant legislation from the golden state that should concern the business community currently. Seyfarth compiled a helpful summary of the measures currently waiting the Governor’s approval.

Headlining the concerning measure awaiting the Governor’s pen is SB 1162, which would expand existing requirements that employers with 100 or more employees provide the California Civil Rights Department with specified EEO-1 pay data, including mean and median hourly rates, as well as a separate second report to be provided by employers that have 100 or more employees hired through labor contractors.  Seyfarth published a more detailed summary of the measure that can be found here.

Also of interest, especially for the labor and agricultural communities, is AB 2183, which would permit a labor organization to be certified through either a labor peace election or a non-labor peace election as the exclusive bargaining representative of a bargaining unit, through a representation ballot card election or by mail, eliminating the need for a physical polling location. Beyond the substance, this measure also entails political intrigue. Specifically, President Biden, who has pledged to be the most union friendly President in history, has encouraged  Governor Newsom to sign the measure, despite the fact that a year ago he vetoed a very similar measure.

Finally, after a failed attempt last year, the legislature this year was able to push through AB 257, or the Fast Food Accountability and Standards Recovery Act, which the Governor signed on labor day.  The measure establishes a 10-member “Fast Food Sector Council” within the Department of Industrial Relations, which will set “sector-wide” minimum standards on wages, working hours, and other working conditions “adequate to ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living” for fast food restaurant workers. The legislation also provides California counties and cities with populations exceeding 200,000 the discretion to establish Local Fast Food Councils that would operate independently from the Council and provide written recommendations to the Council regarding minimum state health, safety, and employment standards. This measure will almost certainly be challenged on NLRA preemption grounds. For a more detailed summary of the measure, see Seyfarth piece here.

DOL Misclassification Enforcement Questions The Need For New IC Regulations. In this space, we have had numerous occasions to discuss rulemaking at the DOL as it relates to classification of independent contractors. Indeed, we recently hosted a fantastic podcast discussing the potential contours of a new DOL NPRM governing the standard for worker classification. It is worth a listen! That NPRM is, of course, not without controversy as the DOL has upheld its pledge to root out improper classification of workers using the standard set during the Trump Era. Given the DOL’s success using the Trump-era standard, the business community rightfully questions the need for a new standard adopted as a federal regulation employers must combat, except maybe to increase potential exposure for employers. The new rule will assuredly be challenged under the Administrative Procedure Act.

More EEOC Problems For The Administration. In the last iteration of this newsletter, we raised the lack of staffing at the EEOC, which in turn has led to a decrease in EEOC activity, and the recent nomination of Kalpana Kotagal to be the next commissioner of the EEOC. Indeed, the first year of the Biden administration saw a sharp decline in activity from the EEOC. As currently comprised, Democrats have had to garner at least one Republican vote to approve any commission action, which has severely limited the EEOC’S ability to approve items in split votes. Senate republicans have stuck together to uniformly oppose Kotagal nomination, continuing the snail’s pace of EEOC action, the only federal agency whose sole mission it is to protect workers from harassment and discrimination on the job. Stay tuned.

Legislation To Encourage Retirement Savings. Despite the real divide currently separating the nation, this congressional session has unexpectedly seen more bipartisanship and successful legislation than we have seen in quite some time. Nowhere has the spirt of bipartisanship been on more display than in the retirement savings space. Indeed, this year, we have discussed legislation focused on improving retirement savings more than once. To that end, this week, Senate Finance Chair Ron Wyden and ranking member Mike Crapo on Thursday formally introduced their committee’s portion of a bipartisan bill meant to increase workers’ retirement savings. The legislation would make it easier for part-time workers to participate in retirement plans, expand federal tax subsidies for retirement saving, and raise the starting age for “required minimum distributions,” among other important changes. The Senate HELP committees advanced its piece of that chamber's retirement package in June, which we discussed here, after the House passed its own by a wide margin in March.