National Labor Relations Board votes to limit joint-employer liability

The outcome of the vote was anticipated, but not set in stone.

A 2015 Obama-era joint-employment liability ruling has been overturned this week, changing the standard for holding a company or ownership responsible for labor law violations that occur as a result of its relationship with another company. Before, the standards stipulated any company with “indirect control” over employees would be liable for breaches of labor law, and this week’s decision tips the balance of power back into hoteliers’ favor.

The precedent also controls the degree to which a corporation is forced to bargain with workers at a franchise as it unionizes, or even if the option of unionization remains on the table. Following this vote, workers may have more hurdles to overcome in the collective bargaining process.

The outcome of this vote was anticipated earlier this year when Marvin Kaplan and William Emanuel were appointed to the NLRB, giving the board a Republican majority. However, the speed at which the board flipped the ruling came as an initial surprise to many industry experts—at the time of the appointments, it seemed the NLRB had more than a few issues to navigate before joint employment would hold its attention.

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The board’s 3-2 vote restores the pre-2015 standard, which determines a corporation is only a joint employer over a franchise if it exercises “direct and immediate control” over its workers. The focus of the decision was on fast-food workers, but it had large ramifications on operations within the hotel industry.

Following the vote, Chip Rogers, president and CEO of the Asian American Hotel Owners Association, issued a statement in support of the NLRB’s decision: 

“This is a major victory for small business owners and the millions of Americans they employ,” Rodgers’ statement reads. “Returning to the common-sense definition of joint employer brings much-needed certainty and stability to hoteliers across the country. The reinstatement of the historical joint employer definition ensures that employers are directly responsible for their employees, and that the franchise business model, which is responsible for creating millions of jobs and paving the way for tens of thousands of hoteliers to achieve the American dream will remain a reliable avenue to economic freedom. While AAHOA applauds today’s decision, we will continue our efforts to pursue a change to the law so that the joint employer definition is statutory and cannot be changed arbitrarily by the next administration without Congressional approval.”