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AG Nessel Urges Swift Action on Federal Proposal to Protect Workers and Ensure Greater Accountability

LANSING Michigan Attorney General Dana Nessel joined a coalition of 18 attorneys general, led by California, the District of Columbia, New York, and Pennsylvania, in a comment letter urging swift action on a new federal proposal aimed at better protecting workers and ensuring greater accountability in the workplace.

In the comment letter, the coalition strongly supports the National Labor Relations Board’s (NLRB) proposed rule regarding standards for determining whether an entity qualifies as a joint employer, i.e., a secondary employer who shares or codetermines matters governing the essential terms and conditions of employment. Even where they are not the direct employer, joint employers are subject to liability for violations of labor laws. The NLRB’s current proposal would rescind and replace a 2020 final rule that took effect during the Trump Administration, which unlawfully shielded companies from liability and exposed millions of workers to harmful and unfair labor practices. In contrast, the current proposal seeks to ensure all controlling companies are accountable and returns the joint employer standard to one that better reflects contemporary employment relationships in the 21st century.

"The previous rule regarding joint employers was not only contrary to the common-law understanding of these types of employers, it was also unnecessarily limiting to workers' abilities to redress grievances," Nessel said. "Our labor laws should reflect the reality of contemporary employment, which may include direct and indirect employers. Both types should be held accountable to federal labor standards, and I am proud to join my colleagues in supporting NLRB's proposed rule."

In today’s economy, joint employer relationships are common. Joint employment frequently involves workers who, while directly employed by a subcontractor, ultimately perform work for the benefit of a larger company. For example, corporations have trended toward outsourcing large subsets of their workforce, such as janitorial and security services. In addition, the COVID-19 pandemic has resulted in staffing shortages in many sectors, such as healthcare and logistics. This in turn may increase demand for temporary workers, who are typically hired by temporary staffing agencies and assigned to a company. These companies may outsource whole functions of their businesses to downstream agencies to cut costs. But these companies often still reserve or exercise control over the downstream company’s employees, whether directly or indirectly, and thus, must share liability for violations of those employees’ rights under labor and employment laws.

Accordingly, the joint employer standard, when appropriately defined, is incredibly important for ensuring accountability and protecting against violations of workers’ rights. The Trump-era rule significantly narrowed the circumstances in which an entity that exercised control over workers could be held legally accountable for federal labor law violations. The current NLRB proposal instead ensures fairness in the workplace and reaffirms that indirect control over essential terms and conditions of employment must be considered in determining joint employer status. Joint employer liability is critical to driving compliance with employment laws. Upstream companies generally exercise greater power to effectuate broader compliance, either through subcontractors or as a result of their influence and stature in the industry. As a result, holding upstream companies accountable as joint employers has pronounced compliance effects that reverberate throughout an industry.

In the comment letter, the attorneys general further assert that the proposed rule:

  • Is consistent with the statutory purpose of the National Labor Relations Act;
  • Provides certainty to the public about the NLRB’s joint employer standard by making it consistent with common law;
  • Offers greater guidance regarding the relevance of indirect control; and
  • Complies with the Administrative Procedure Act.

In filing the comment letter, AG Nessel joins the attorneys general of California, the District of Columbia, New York, Pennsylvania, Colorado, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, North Carolina, Oregon, Rhode Island, and Washington.

A copy of the comment letter is available here.

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