US labor board moves to ease companies’ liability for contractor, franchisee violations
NLRB Chairman John Ring (Screen Capture)

The U.S. agency that enforces federal labor law on Thursday took the first steps toward loosening an Obama-era standard that made it easier to hold companies liable for illegal labor practices by their contractors and franchisees.

The five-member National Labor Relations Board, whose majority was appointed by President Donald Trump, proposed a rule that would restore an earlier standard. Under it companies were considered to be so-called joint employers with their contractors or franchisees only when they exercised direct control over labor issues such as hiring and firing workers and setting wages.

In a 2015 decision, the NLRB had said a company could be a joint employer when it has indirect influence over the working conditions of a contractor’s employees. Joint employers can be held liable for labor law violations and required to bargain with unions representing contract workers.

Overturning that standard has been a top priority of business groups, which say the Obama-era ruling could upend supply chains and the franchise model.

Unions, worker advocates and many Democrats have said the standard the board created in 2015 was necessary because of a steady increase in the outsourcing of labor in many industries over the last few decades.

The board said its proposal would be formally published on Friday, kicking off a 60-day public comment period.

The NLRB had overturned the Obama-era joint employment standard in a December ruling. But it wiped out that decision two months later because a board member appointed by President Donald Trump had a conflict of interest.

In June, NLRB Chairman John Ring, a Trump appointee, said that adopting a rule would provide a higher level of certainty to employers and unions than issuing a new decision.

Reporting by Daniel Wiessner in Albany, New York, Editing by Alexia Garamfalvi and Steve Orlofsky