The U.S. National Labor Relations Board is nearing its extended deadline for public comments on proposed changes to the joint-employer standard that could further complicate relationships between companies working together, particularly hotel operators and third-party vendors.
The proposed rule would designate two or more employers as joint employers if they “share or co-determine those matters governing employees’ essential terms and conditions of employment,” according to the NLRB’s proposal. Those factors could include wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline and assignment, among other others.
The changes to the standard would also open membership in a hotel's labor union to temporary workers.
In a response filed with the government on Dec. 6, the American Hotel & Lodging Association opposed the rule changes, arguing they "would place substantial and unwarranted burdens on our members’ ability to enter into routine contracts for needed services with third-party vendors, such as to provide cleaning and landscaping services, among other things, and would inject uncertainty into the economy when it teeters on the edge of a recession."
In a separate statement, AHLA President and CEO Chip Rogers said that the proposed joint-employer rule would have “a chilling effect” on the hotel industry and the franchising model and urged the NLRB to retain the current standard.
“It would minimize franchisees' control over their own businesses, severely complicate hotels’ ability to contract with independent vendors and allow courts and government bureaucrats to subjectively determine joint-employment liability,” he said.
The NLRB is accepting comments on the proposed changes until Dec. 21.
What Does It Mean?
The joint-employer standard has changed several times in recent years, starting with the 2015 Browning-Ferris decision that removed the joint-employer standard requirement that an employer exercise control over an employee. That standard was overturned in 2017 in the Hy-Brand Industrial Contractors case, but that decision was vacated months later after it was determined a NLRB board member had a conflict of interest.
The NLRB set out in 2018 to overhaul the joint-employer standard again, and finalized those changes in 2020. The standard at that time was that businesses, to be considered joint employers, must share or co-determine essential terms and conditions of employment and have evidence of “substantial direct and immediate” control over those terms and conditions.
At the end of 2021, the NLRB indicated it would rework the joint-employer standard once more. In September 2022, it proposed broadening the joint-employer standard.
While the joint-employer standard is certainly an issue for hotel franchisors and franchisees, this particular rule change would have a greater impact on the hotel companies that use staffing agencies to fill open positions, especially given the labor shortage, said Andria Ryan, partner at Fisher Phillips.
The new standard would likely apply in this situation because the hotel companies hiring the temporary workers through the agency would determine the workers’ schedules, supervise their work on a daily basis and set rules for them to follow, she said. It’s also likely that the staffing agencies are sending over the same employees to work for the hotel companies instead of sending in different employees each day.
“I think from a practical standpoint, that's where we're going to see some challenges because so many hospitality employers are turning to staffing companies to supplement their workforce,” she said.
The NLRB’s joint-employer rules are different than those of the U.S. Department of Labor’s, Ryan said.
Both address whether any worker could be considered an employee of more than one company, but the NLRB’s proposed changes would have direct bearing on issues with collective bargaining and unfair labor practices while the Labor Department rule is focused on wages and hours.
The NLRB's proposal to broaden the definition of joint employer could allow hotel labor unions, or employees attempting to unionize, to include temporary employees from those staffing agencies, she said.
“Let’s say the housekeeping, engineering, food-and-beverage and culinary departments decided to organize a union,” she said. “Are we going to also be able to bring staffing agency employees under the umbrella of that collective bargaining agreement because there were joint employers?”
The other factor at play is potential inclusion of temporary workers in cases of unfair labor practices as they relate to unions, Ryan said. If a temporary worker included in a hotel union was terminated, demoted or subject to any other form of retaliation for their union activity, that could open up liability for the hotel company as well as the staffing agency.
“A hotelier may be responsible or will be held liable for an unfair labor practice committed by a staffing agency if they did something negative to the employee,” she said.
What’s Next
Ryan said a final decision on the proposed standard isn't likely until February or March, but hotel industry executives should be prepared.
Ryan said she has advised hotel clients, particularly operators who work with staffing agencies, to take a practical approach to any changes.
“It’s still worth it to try not to be, but if it’s likely that you’re going to be a joint employer, then align yourself with reputable staffing companies,” she said.
That means working with companies that pay their employees properly, that perform background checks and review their work or immigration status, she said.
“Make sure they cooperate with you and you cooperate with them when there’s harassment complaints or requests for accommodations — the kinds of things that are likely to get the two of you in trouble,” she said.