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AGC Urges Court to Overturn NLRB Expansion of Joint Employer Standard

June 16, 2016

AGC and seven other trade associations on June 15 jointly filed an amicus brief with the U.S. Court of Appeals for the D.C. Circuit in the Browning-Ferris Industries case concerning the definition of “joint employer” under the National Labor Relations Act.  The brief supports Browning-Ferris Industries’ appeal of the August 2015 National Labor Relations Board decision expanding that definition.  It supplements the appeal by emphasizing the adverse impact of the decision on the U.S. economy in general and in the construction, healthcare, hospitality, retail, and franchising industries in particular.

For 30 years prior to last year’s decision, the Board found an employer to be a “joint employer” of another company’s employees only if the employer exercised direct control over the employees’ essential terms and conditions of employment.  Under the new standard, the Board may find “joint employer” status even when the employer merely exercises indirect control over, or has simply reserved the right to control, terms and conditions of employment.

AGC’s amicus brief argues that the Board’s decision not only lacks legal validity, it “is tone deaf to the practicalities of American business and threatens to undermine a broad range of business relationships which are vital to the nation’s economy.”  Furthermore, “the murky guidance provided in the [decision] makes it virtually impossible for businesses to apply the new standard with any confidence as to whether they are getting it right.”

The brief discusses how the decision impacts the commercial construction industry.  It describes the role of general contractors in coordinating schedules and work of multiemployer worksites and the resulting need to exercise a certain amount of control over subcontractors and their employees to ensure safety and efficiency.  The brief explains:

A prime construction contract with a project owner inevitably requires the contractor to exercise control over the project in ways that impact the terms and conditions of everyone’s employment on the site…To meet these obligations, a prime contractor frequently includes a variety of clauses in its subcontracts, such as clauses that require subcontractors to: remove or terminate employees on the general contractor’s demand; employ only workers who are approved by the general contractor; employ only workers who pass drug tests; receive general contractor approval before working overtime; work only during certain times of the day or certain days of the week; comply with pre-assignment procedures such as criminal background checks; follow specific safety rules, including attending safety meetings, wearing protective gear on site, and reporting accidents and injuries; and follow work rules established by the general contractor. Under [the Board’s decision], merely maintaining these compliance-related requirements may be sufficient to establish a joint employer relationship.

AGC will continue to closely monitor the case and report on significant developments.  Meanwhile, AGC members can find guidance on managing the risks presented by the Board’s decision in AGC’s online Labor & HR Topical Resources library.  To access, go to www.agc.org/topicalresources, login as an AGC member using the Login button in the upper left corner, then choose “Unions/NLRA” from the main category pull-down menu and “Joint Employer” from the subcategory pull-down menu.

For more info, contact Denise Gold, Associate General Counsel, at goldd@agc.org or (703) 837-5326.

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