Much has been written in recent months about the National Labor Relations Board (NLRB) standard for joint employment liability between separate businesses, especially with respect to franchisor McDonald’s Corporation, which is facing dozens of cases in which it has been named as a respondent along with its franchisees. The NLRB’s General Counsel has been advocating for a change to the joint employer test currently used by the NLRB. An arm of the U.S. Chamber of Commerce recently published a 40-page report on how the NLRB’s proposed new joint employer test threatens small businesses.
Even without a change to the legal standard, though, businesses
and nonprofits have often been caught off-guard by the types of arrangements
that can give rise to claims of joint employer liability against an entity that
doesn’t serve as the employer on paper or issue workers’ paychecks or Form
W-2’s. Besides the franchise relationships at issue in the McDonald’s cases,
arrangements with heightened joint employer risks include independent
contractor relationships, the full range of temporary or contingent worker
service models, and workforce supply arrangements. The latter sometimes come in
the form of employee leasing or Professional Employer Organizations (PEO’s).
Also, joint employment issues can arise when two companies are affiliated by
some measure of common ownership or control.
Business organizations would be wise in this current legal climate
to take a proactive approach to minimizing joint employment risks. Worthwhile
steps to consider taking now include:
- Reviewing employee handbooks and manuals for possible joint employer issues
- Auditing workplace practices and procedures
- Training directors, officers, and management on key joint employment risks
- Reviewing affiliations with other entities, as well as service contracts, to assess and take steps to minimize joint controls and joint employer risks
- Conducting insurance coverage audits and considering insurance against joint employment risks
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