By Emily Estus | Right now, a House committee is putting together legislation to clarify a new legal standard holding corporations responsible to subcontracted (or franchise) employees, known as the “joint employer” rule. The current standard considers a corporation a “joint employer” with a contractor or franchise in terms of liability if they have direct, indirect, or reserved authority to control the terms and conditions of employment.
Unions and workers’ groups say the rule gives them greater control over key labor standards in an increasingly fissured economy. Local franchise operators and contractors, however, claim that the vague nature of the new definition creates uncertainty about liability. They argue this makes them more reluctant to provide training or staff development that could be construed as indirect control, especially after similar joint-employment standards were adopted by the Wage and Hour Division of the U.S. Department of Labor, as well as various state and local agencies.
These standards were first introduced in 2015, when the National Labor Relations Board (NLRB) decided in Browning-Ferris Industries that joint-employer liability extends to companies that have indirect control over employees, updating the definition of joint employer to fit “changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships.” The decision in this case has since influenced how joint employment is treated in other workplace laws, including the Fair Labor Standards Act (FSLA).
This is obviously a complicated issue—but what shouldn’t be complicated is continuing to facilitate the role employers play in providing training opportunities and promoting employee benefits. In our recent report on the skills gap in the U.S., we found that skills are particularly lacking in the health care, tech, education, and manufacturing industries—all of which will be impacted by the joint-employer standard. This is especially true of “middle skill” jobs that do not necessarily require four-year college degrees, but do need specialized training and some sort of credential.
One of the most important places that employees can receive training is from employers themselves. Both on-the-job learning and formal skills training programs are key to giving workers the tools they need to succeed and increasing businesses’ overall efficiency. Businesses need to know with certainty that they can offer skills training without running afoul of liability laws. That’s why Congress should include a “safe harbor” training provision, regardless of how Congress defines a joint employer in upcoming legislation. This training provision could clearly state that providing educational opportunities—including formal training programs and tuition assistance—does not constitute any form of joint-employer control. Clarity on training is a win for workers, a win for business, and a no-brainer for Congress.