Joint Employer

The hotel industry fosters opportunities for entrepreneurs across the country to open hotels through the franchise model. For more than 30 years, one of the cornerstones of labor law was the joint employer standard, which protected small businesses from undue liability involving employees over whom they do not have direct control. In the 2015 Browning-Ferris (BFI) decision, the National Labor Relations Board (NLRB) reversed more than three decades of labor law when they redefined what it means to be a joint employer. Under the BFI standard, a joint employer was defined as anyone who exercises indirect, potential, or unexercised reserved control. As a result, employers became potentially liable for actions and activities of employees they did not even directly employ. This decision had a chilling effect on the hotel industry, especially franchisees, who suddenly had uncertainty and confusion about whom they employed and were liable for under the law.

In the years since the BFI decision, the definition of what it means to be a joint employer has ping-ponged back and forth. NLRB reversed the BFI standard in 2017, only to turn around and vacate that decision two months later. In 2020, just before the pandemic, the Trump administration’s NLRB issued a rule that employees could only claim to be employed by companies holding “substantial, direct and immediate control” over their employment.

Today, the Biden administration’s NLRB is trying to turn back the clock again, proposing a rule to rescind the changes made under the Trump administration and go beyond the Obama-era joint employer standard. If implemented, the rule would undermine the franchise model upon which so many hotel small businesses are built.