Joint employment: Overview

The National Restaurant Association supports maintaining the traditional joint employment standard of “direct and immediate” control that has provided employers with clarity about their legal obligations over the past 30 years.

In August 2015, the National Labor Relations Board issued a controversial decision in the Browning-Ferris Industries (BFI) case holding that two companies could be considered joint employers if they had “indirect, potential or reserved control” of employees. This overturned more than 30 years of legal precedent under the National Labor Relations Act. The vague new standard has created legal uncertainty and anxiety over what workplace policies may trigger joint-employer liability, thereby creating higher operational costs, greater exposure to litigation, and diminishing job creation, investment and expansion.

Businesses have experienced further exposure and migration to expanded liability under other statutes, most notably the Fair Labor Standards Act. Adding to the chaos and uncertainty is the NLRB’s initial return in December 2017 to the traditional joint employer standard in its consideration of the Hy-Brand case, followed by its subsequent decision in February 2018 to vacate Hy-Brand and return to the expanded BFI standard. Today, the BFI standard established during the Obama administration remains the law of the land.

Our position

The Association supports regulatory and legislative efforts to codify and restore the traditional “direct control” standard of joint employer in federal labor law.

  • Legislation: We support the bipartisan Save Local Business Act that passed the House in November 2017.
  • Regulatory reforms: We support regulatory efforts to restore certainty. These include the NLRB's proposed rulemaking which would hold employers jointly liable “only if [an employer] possesses and exercises substantial, direct and immediate control over” employees. Under the NLRB proposal, “indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint employer relationship.” The Department of Labor has also noticed its intent to proceed with a joint employer rulemaking under the Fair Labor Standards Act in 2019.