BUSINESS NEWS DECEMBER 28, 2018 / 12:50 PM / UPDATED 9 MINUTES AGO

U.S. appeals court nixes labor agency's Obama-era 'joint employment' test

Daniel Wiessner
3 MIN READ

(Reuters) - A federal appeals court on Friday ruled that a U.S. labor agency’s Obama-era standard making it easier to hold companies liable for illegal labor practices by their contractors and franchisees was too broad, giving business groups a victory.

The U.S. Court of Appeals for the D.C. Circuit, in a 2-1 ruling, said that a 2015 National Labor Relations Board decision did not properly define the kind of “indirect control” over working conditions that the agency said could make companies so-called joint employers of contract or franchise workers.

Joint employers are required to bargain with contract workers’ unions and can be held liable for violating those workers’ rights under federal labor law. Overturning the 2015 standard has been a top priority of business groups, including the U.S. Chamber of Commerce, the nation’s largest business lobby, which said the Obama-era ruling threatened to upend supply chains and the franchise model.

The five-member NLRB, whose current majority was appointed by President Donald Trump, proposed a rule in September that would restore an earlier standard for determining when a company is a joint employer. The board has said it expects to adopt a final rule by June.

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