OFCCP Week In Review Bonus: Overview of the Trump Administration’s Government-Wide Redefinition of Who is a Joint-Employer

The National Labor Relations Board (NLRB)

The NLRB issuing a Final Rule is just one part of the Trump Administration’s overarching efforts to realign the federal government’s several definitions of joint-employer status.  As we have previously noted, this “piecemeal” approach to defining who is a joint-employer under the various federal laws at issue is necessary because each law defines “employer” differently. Those seeking either a “one-size fits all” global answer or a simple “bright-line in the sand” litmus paper test should choose a different profession: those seeking to know whether two corporate entities are “joint-employers” are off on a fact-intensive and highly nuanced legal odyssey.

The U.S. Department of Labor (USDOL)

We previously reported the U.S. Department of Labor’s Final Wage-Hour Division (WHD) Rule defining a joint-employer to determine liability for wage-hour violations under the Fair Labor Standards Act (FLSA). Scheduled to take effect on March 16, 2020, USDOL adopted the four-factor balancing test it took from Bonnette v. California Health & Welfare Agency, 704 F.2d 1465 (9th Cir. 1983), to define joint-employer status.  Under this test, an entity is a joint-employer of another’s employees if the entity actually, directly or indirectly:

1. hired or fired the employee;
2. supervised and controlled the employee’s work schedule or conditions of employment to a substantial degree;
3. determined the employee’s rate and method of payment; or
4. maintained the employee’s personnel records (although the maintenance of personnel records by itself does not establish a joint employer relationship).  This standard is different from the NLRB’s Final Rule because it places more weight on the existence of indirect control by the entity.

And, the USDOL’s Final Rule has now “gone political” since 17 Democratic Attorney Generals, joined by the District of Columbia, have now filed suit seeking to enjoin implementation of the USDOL’s Final Rule. On February 25, 2020, the day before the NLRB issued its Final Rule as to joint-employer status under the National Labor Relations Act (NLRA), these 18 plaintiffs filed suit in the United States District Court for the Southern District of New York seeking to block the USDOL’s Final Rule. New York v. Scalia, Case No. 20-01689 (S.D.N.Y. February 25, 2020).  Their Complaint alleges that the USDOL’s Final Rule is arbitrary and capricious and violates the Administrative Procedure Act (a federal statute with which federal agencies must comply to implement new federal regulatory Rules and regulations).

Equal Employment Opportunity Commission (EEOC)

In addition to the NLRB and USDOL’s Final Rules, in mid-November 2019, the Trump Administration released its “Unified Agenda of Federal Regulatory and Deregulatory Actions – Fall 2019,” in which the Equal Employment Opportunity Commission (EEOC) noticed its intent to issue its own Proposed Rule regarding joint-employer analysis under the federal anti-discrimination laws the EEOC enforces.  These laws include Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and the Americans with Disabilities Act.  Thus, employers will shortly see a third federal agency address analysis of joint-employer status.

Office of Federal Contract Compliance Programs (OFCCP)

Interestingly, this leaves only the OFCCP silent as to any intention to address which companies are sufficiently operationally closely intertwined to be deemed a joint-employer. OFCCP is the sub-agency within USDOL tasked to ensure federal Government contractor compliance with nondiscrimination and affirmative action obligations under Executive Order 11246, Section 503 of the Rehabilitation Act, the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA, or 38 USC Section 4212), and their implementing regulations.

Labor Relations Policies Now Take Us All Into the Political Arena and the Courts!

The Trump Administration’s systematic realignment of the definition of which companies enjoy a joint-employer relationship is of great concern to labor unions and organizations tasked to protect employee rights. The union concern is that the union loses its ability to effectively bargain with a company contracting to perform work for a client company (like a vendor servicing a major company) or perhaps with a retail company doing business under a franchise agreement (like a McDonalds franchise operator) when the company contracting the work (or licensing to the franchisee) dictates many of the terms and conditions of employment of the vendor company or the franchisee via the vendor contract or via the franchise agreement.

Fearing that the effect of these changes will further the continuing shrinkage of private-sector unionization of employees (which continues to shrink to the new current low of only 6.4%, the lowest percentage in the last 85 years since the NLRA became law in 1935 authorizing the rights of employees to unionize) and will shrink or eliminate worker protections the Obama Administration pushed through to benefit the unions, the nation’s unions have now stepped up their efforts in the 2020 presidential election in hopes of removing the current administration.  For example, the Service Employees International Union (SEIU), a union of about two million members employed largely in the healthcare industry, public sector, and property services, has recently announced its plan to invest $150 million in a nationwide campaign to defeat Donald Trump in 2020.  The SEIU anticipates spending money in 40 states, especially targeting voters in several swing states up for grabs.

The SEIU’s efforts, along with the suit brought by the Democratic Attorney Generals in response to the USDOL’s joint-employer Final Rule, are an apparent and stark reminder of labor’s concerns over the Trump Administration’s pro-business efforts.  Thus, the definition of who is a joint-employer, and the constant battles back and forth, is another reminder of the continuing competition of workplace interests taking center stage in the upcoming 2020 presidential election.