Lawmakers are planning to introduce broad legislation Thursday to reverse an Obama administration-era effort to vastly expand corporate legal liability.
The four lawmakers, three Republicans and one Democrat, seek to codify that the “joint employer” doctrine — when one business can be held legally responsible for workplace law violations at another business — can apply only under narrow circumstances, specifically when one business has had “direct control” over the other’s workers.
Rep. Virginia Foxx, R-N.C., chairwoman of the House Education and the Workforce Committee, will sponsor the legislation, with Reps. Bradley Byrne, R-Ala., chairman of the Workforce Protections subcommittee, Rep. Tim Walberg, R-Mich., chairman of the Health, Employment, Labor, and Pensions subcommittee, and Rep. Henry Cuellar, D-Texas.
A congressional source, speaking on the condition of anonymity, said Thursday’s legislation will have a broad focus, seeking to cover all potential legal activity covering joint employer liability, not just that involving federal agencies. Business groups fear that the federal government’s prior use of the doctrine has legitimized it for class-action suits and other private lawsuits.
Republicans have been fighting to limit the doctrine ever since the National Labor Relations Board, the main federal labor law enforcement agency, expanded it in 2014 to include “indirect control” over another business’ workforce. Critics say the much vaguer standard threatens the business practice of franchising since it makes franchisers potentially responsible for any violations by their franchisees. The board has used it to pursue a major case against McDonald’s Corp.
Previous Republican efforts have sought to roll back the NLRB’s policy. The House Appropriations Committee this month passed a spending bill that included a provision prohibiting the board from using the policy. Last month, Labor Secretary Alexander Acosta formally withdrew his department’s use of the expanded doctrine. The committee source said that lawmakers no longer believe that such efforts are sufficient and that the law itself must be clarified.
Business groups are eager to see Congress address the issue. “The International Franchise Association appreciates the bipartisan work by members of Congress to provide certainty to the business community on the joint employer scheme. We are hopeful legislation will be introduced soon, and that it is broad enough to address the scope of the joint employer problem, which has expanded well beyond the National Labor Relations Act,” said Matt Haller, the group’s senior vice president.
