Another Attack on Employer-Employee Relationship

It seems that every month the Obama Administration issues a new attack on independent contractor arrangements, making it a full-time job for trucking industry employers to just stay current with the ever-changing regulations.

In the latest attack, the National Labor Relations Board (NLRB) redefined the employee-employer relationship with a decision announced August 27th in a California case ruling against the waste management firm Browning-Ferris.

NRLB logoThe new definition will make it harder for companies with franchises and independent contractors to avoid offering “protections and benefits” whether the employees want them or not. It will also give unions more negotiating power and make contracting companies more vulnerable to legal action.

In the decision, the board determined that Browning-Ferris should be considered a “joint employer” with a staffing agency contracted to support their California recycling facility. Under this new status, the company could be pulled into collective bargaining negotiations or held liable for labor violations committed by the direct employer.

Not Good for Franchise Operators Either

The new standard could greatly impact the franchised-business model, increase labor costs, and add more uncertainty to employee-employer relationship. This led the International Franchise Association (IFA) to step up against the NLRB.

IFA president Steve Caldeira says he’s is confident the new standard “will be rejected by local franchise owners, legislators and, ultimately, the courts.” IFA is hoping that business-oriented Congressmen will take aim at the new standard—a faint hope for this session of congress with the House in disarray over who will lead the body—and a sure-fire target for an Obama veto if any legislation is actually passed.

For businesses that contract services – from truckers, janitorial support or sales– joint employer status would mean increased possibility of lawsuits, employee unionization and the use of “economic weapons” such as pickets and protests.

Before the NLRB ruling, companies using contracted services were insulated from such hazards. If left unaddressed, the new standard could place distributors in danger of these labor issues whenever they have “indirect or unexercised potential control” over a contract employee. As a result, many businesses could bring currently-outsourced services in-house.

The decision is more likely to be challenged in the federal courts, but will go into effect unless a federal judge can be convinced to issue a stay or injunction against the NLRB. With that in mind, you can bet attorneys will be shopping for conservative judges in places like North Dakota for help with this kind of ruling.

Updating white-collar exemption

In other labor news, the Department of Labor (DOL) is requesting comments on its proposed rule to extend overtime protection to millions of white collar workers. They will most likely finalize the rule in the coming months and implement it in early 2016.

Currently the Fair Labor Standards Act requires a two-part test to exempt an employee from overtime pay. To qualify, the employee must earn $23,660/year and pass the “duties test” to determine if their job is “white collar.” The new proposal increases the salary threshold to $50,440/year with a built-in annual increase and requests feedback on the duties test in its current form. This will not alter the exemption of truck drivers which are still exempted from federal overtime provisions as contained in the Fair Labor Standards Act as long as they are subjected to federal hours-of-service regulations.

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