The National Labor Relations Board (NLRB) recently issued a ruling that dramatically expands the definition of “joint employer.” The NLRB ruling determined that employers—including clubs—that hire independent contractors (ICs), may be considered a “joint employer” with the ICs’ contracting firm. Thus clubs could be liable for any labor violations committed by the IC. Clubs that hire ICs such as landscapers, cleaning service providers and others should take heed as this ruling dramatically broadens their potential liability.
In essence, this ruling makes it possible for clubs to be held responsible for employment and labor law violations that they have in no way committed. Under this ruling, if a contractor violates federal and state overtime and minimum wage, a club may be held accountable for these violations and may be subject to litigation.
Understandably, knowing whether a contractor hired by a club is complying with employment laws is a very difficult endeavor, but clubs should still ensure that any IC agreements that they have are well-defined and help defray the costs should a “joint employer” situation arise. Club leaders are advised to discuss this matter with their local club counsel as soon as possible.
This ruling may also upend many longtime business practices and standards to which employers have grown accustomed. It reverses previous rulings that stated that clubs were only responsible for employees under their direct control. Under this broad determination from the NLRB, clubs that may not consider these workers “their employees” may now be responsible for any violations that their “joint employer” commits.
The NLRB’s decision is the most recent of many actions taken by government agencies that have come down against clubs.
In addition to this NLRB ruling, the Department of Labor issued its new interpretations on classifying workers as either ICs or employees. Unfortunately, this new guidance greatly expands who may be considered an employee. Given the NLRB’s new, broadened definition of “joint employer,” clubs must be more careful than ever in all aspects of their business activities. If not, clubs may be vulnerable to costly penalties (see Laws & Regs, “Congress Hikes Penalties”).
Though cumbersome and difficult to implement, clubs must adhere to these requirements. NCA will continue to work with its partners in the Coalition for a Democratic Workplace to fight the NLRB’s overreach—like its joint employer decision. If you have any questions regarding this matter, please contact NCA’s Vice President of Government Relations and General Counsel, Brad Steele at [email protected].
Philip Mike is NCA’s senior communications manager.