Two former National Labor Relations Board officials argued Thursday in Washington over how federal regulators should resolve open questions about “joint employer” relationships between companies that could expose contractors and franchisees to liabilities for workplace violations.

The federal labor board, led by former Morgan, Lewis & Bockius partner John Ring, is revisiting the Obama-era agency's expansion of the definition of “joint employment” through a rulemaking process. Business advocates bemoaned that expansion, suing over the board decision and advocating for federal legislation to put in place a business-friendly definition that would reduce scenarios where one company is held responsible for labor claims arising from contractors and franchisees.

Labor and management lawyers, including former NLRB chairman Philip Miscimarra, now at Morgan Lewis, and Richard Griffin, a former NLRB general counsel, offered differing views about joint-employment during a panel discussion Thursday in Washington hosted by the Federalist Society. The dispute is one of the biggest pending issues at the labor board.

Miscimarra said the current expanded definition of joint employment has created uncertainty for companies and is “extremely unpredictable.” The NLRB in 2015 expanded the definition of joint employment to include employers who share direct, indirect, potential or even “ultimate” control over another company's workers.

“I have sympathy for the considerations that may have prompted my former colleagues on NLRB to expand the concept of joint employment,” Miscimarra said in his remarks. “We live in a complicated economy. It would be nice if we could unscramble the economy and eliminate business constraints that prevent conventional employers from being more generous in the wages and benefits and hours worked by their employees. But that type of simple economy has not existed in this country for more than 200 years.”

Griffin, the Obama-era NLRB general counsel, disputed the argument that expanding the definition of joint employment created a “complicated” and unworkable regulatory environment for the business community.

“If there are two entities that share or co-determine your essential terms and conditions of employment, they should both be at the bargaining table,” said Griffin, now of counsel at Bredhoff & Kaiser in Washington.

Richard Griffin, of counsel with Bredhoff & Kaiser, speaking during a panel discussion Thursday at the Federalist Society convention in Washington. Credit: Diego M. Radzinschi / NLJ

The labor board got tripped up last year when it quickly tried to undo the Obama standard, and now the agency is in the middle of rulemaking. That process, which has included seeking comments from interested groups, could take months to wrap up and would almost certainly draw a court challenge.

There's a big joint-employment case pending before the labor board involving whether McDonald's “controls” more than two dozen franchises and should be responsible for setting wages and grappling with workplace conditions.

Richard Epstein, a New York University Law School professor who also spoke on Thursday's panel, suggested a ruling against McDonald's would have wide consequences.

“You will destroy the franchising industry if essentially you make a franchisor liable for the unfair labor practices of its franchises,” Epstein said. “Because at that time it then has to exert enormous control over it.”

Rulemaking at the NLRB is rare, and the deadline for submitting comments on the joint-employer proposal ends next month. Thousands of comments already have been submitted about the proposal, many supporting the change to a more narrow definition of joint employment and many opposing it.

“The proposed rule change further protects large corporate and franchise interest at the expense of the American working class,” Catherine Ruckelshaus, general counsel and legal director at the National Employment Law Project, said in a comment. “Corporations, franchises, temp agencies and subcontractors at the top of the supply chain should be held accountable for ensuring a living wage and a safe working environment.”

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