Evidence uncovered by the House Education and the Workforce Committee indicates that the Labor Department and the National Labor Relations Board coordinated on their new controversial new “joint employer” rules, which vastly expand legal liability for large businesses. Department officials have said there was no contact between the two entities on the subject.
“The committee has received new information that raises concerns about the veracity of the department’s Nov. 18 response, as well as subsequent communications,” committee Chairman John Kline, R-Minn., said in a Jan. 19 letter to Labor Department Secretary Tom Perez.
Kline’s letter referred to data provided to the committee by the labor board, an independent agency that is the main enforcer of federal labor laws. The data included messages that indicated that on at least two occasions last year officials from the department and the board’s general counsel’s office discussed joint conferences regarding the rule. It is not clear if the meetings were held.
The information from the board also showed that labor board General Counsel Richard Griffin last year directed an official from the department’s Occupational Health and Safety Administration to talk to one of his staffers regarding a high-profile case involving the rule that the board is pursuing against McDonald’s Corp.
“The information clearly demonstrates that the department and the NLRB communicated directly on joint employer policies. This communication has been at the center of the committee’s oversight inquiry from the beginning. Even the department’s repeated assurances of ‘no coordination’ between the two agencies are now suspect,” Kline wrote. He does not allege any violation of the law.
The joint employer rule involves when a businesses can be held legally liable for a separate company’s violations of worker protection laws on the grounds that they have direct control over the other company’s workers. Both the labor board and the department have pushed to allow the definition to include situations involving indirect control as well, such as when contractors subcontract or when companies franchise out their brand. The agencies have argued that the changing nature of the economy warrants updating the rules.
Republicans and business groups have argued that the change would upset long-held business practices and hurt the economy. They have long suspected that the board and the department are working together.
An expanded joint employer rule would make union organizing easier since labor leaders could focus on one big company, such as McDonald’s Corp., rather than organizing each McDonald’s franchise individually. Perez is a major booster of labor organizing who often speaks at union-organized events. Griffin was formerly the top lawyer for International Union of Operating Engineers.
On the day after Kline sent its letter, the Labor Department’s wage and hour division issued a new “administrator’s interpretation” of the how the joint employer rule would apply in enforcing the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act. It said that an employer can be liable for paying lost wages to another company’s workers if the department determines that it has “indirect” control over the workers.
“Each joint employer is individually responsible, for example, for the entire amount of wages due. If one employer cannot pay the wages because of bankruptcy or other reasons, then the other employer must pay the entire amount of wages; the law does not assign a proportional amount to each employer,” the announcement said.
That followed moves last year by the labor board to expand how the rule applies to the National Labor Relations Act. In a decision in a case called Browning-Ferris, the board said that contractors can be considered to be joint employers of their subcontractors’ workers. The board is also pursuing a case against McDonald’s, arguing that it is a joint employer with its franchisees, despite most of them being privately owned business that rent out the corporate brand.
