House Passes Joint Employer Bill, Providing Certainty for Small Businesses
On Nov. 7 the National Association of Home Builders commended the U.S. House of Representatives for passing the bipartisan Save Local Business Act, legislation that would amend the National Labor Relations Act and Fair Labor Standards Act to restore a common sense joint employer standard for home building firms and other small businesses.
“Under current law, it is possible for a home builder to be considered a joint employer through such a basic business act as setting the work schedule of their subcontractor,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “This bill would reinstate the sensible criteria that has worked for the American business community for more than 30 years and provide legal certainty for all business owners.”
In 2015, the National Labor Relations Board overturned decades of precedence in the case of Browning-Ferris Industries of California Inc. by affirming that a company could be considered a joint employer if it has indirect control or the potential to determine the key terms of an employee’s employment, including hiring and firing, supervision, scheduling and the means and method of employment.
The question of what can be deemed indirect control and just how much of it could legally constitute joint employment was left open-ended by the NLRB, causing confusion and uncertainty for the housing and small business community.
“Since the indirect test is so vague and non-specific, the NLRB has not excluded the possibility that a home building firm could be found to be joint employers of its subcontractors if it merely asked for additional subcontractors to complete a job that is running behind schedule,” said MacDonald.
This is especially problematic for the housing industry, given that most home building companies employ fewer than 10 workers and rely on an average of 22 subcontractors to complete a home.
The Save Local Business Act offers a common-sense solution to the uncertainty generated since the NLRB’s ruling by proclaiming that a company may be considered a joint employer of a worker only if it ‘directly, actually and immediately’ exercises significant control over the primary elements of employment.
“By codifying this definition, the legislation eliminates the uncertainty that has threatened to upend the residential construction sector and provides employers with a clear standard for joint employment,” said MacDonald. “We urge the Senate to promptly introduce similar legislation.”