PROPOSED FEDERAL REGULATIONS defining a “joint-employer standard” would have a “chilling effect” on the hospitality industry and franchises in general, according to the American Hotel & Lodging Association. The National Labor Relations Board’s latest version of the standard could define two companies as joint employers if they both control certain elements of employees’ terms and conditions.
The period for comments on the proposed regulations ended Nov. 21 and the would rescind and replace the joint-employer rule that took effect on April 27, 2020. That previous rule established that “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” to be considered a joint employer.
However, a ruling by the U.S. Court of Appeals for the D.C. Circuit in July reversed that rule. Now, under the new rule, “two or more employers would be considered joint employers if they ‘share or codetermine those matters governing employees’ essential terms and conditions of employment,’ such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules,” according to NLRB.
Evidence of reserved and/or indirect control is also considered when determining a company’s joint-employer status under the National Labor Relations Act.
“In an economy where employment relationships are increasingly complex, the Board must ensure that its legal rules for deciding which employers should engage in collective bargaining serve the goals of the National Labor Relations Act,” said Lauren McFerran, NLRB chairwoman. “Part of that task is providing a clear standard for defining joint employment that is consistent with controlling law. Unfortunately, the board’s joint employer standard has been subject to a great deal of uncertainty and litigation in recent years. Rulemaking on this issue allows for valuable input from members of the public that will help the board in its effort to bring clarity and certainty to these significant questions.”
However, in its extensive comments to the board opposing the new rule, AHLA said it is too intrusive into the current franchising model.
“If implemented, NLRB’s proposed ‘joint-employer’ rule would have a chilling effect on the hotel industry and the entire U.S. franchising model,” said Chip Rogers, AHLA president and CEO. “It would minimize franchisees’ control over their own businesses, severely complicate hotels’ ability to contract with independent vendors and allow courts and government bureaucrats to subjectively determine joint-employment liability. We strongly oppose these proposed changes and urge the NLRB to keep in place the current joint-employer standard. It provides predictability and stability for a successful franchising model that’s one of the top pathways to the American Dream for minority business owners.”