The Co-Employment Pendulum

The National Labor Relations Board is on course to reverse direction on its joint-employer policies. The prior board, under the Obama Administration, broadly expanded the definition of joint-employment in 2015. A Trump-appointed board has proposed a rule returning to a narrower definition.

In the 2015 decision, the NLRB voted 3-2 to expand the definition of joint employment, ruling staffing buyer Browning-Ferris Industries of California was a joint employer of workers employed by staffing firm Leadpoint Business Services at BFI’s Milpitas, Calif., recycling site. The board cited indirect and direct control that BFI possessed over key employment terms and conditions of the Leadpoint workers.

The Trump-appointed board announced its new rule in September 2018. Under the proposed rule, an employer may be found to be a joint employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.

A public comments period has been extended multiple times. The new rule is anticipated to be finalized early this year.

Staffing Firms’ H-1B Lawsuit Moves Forward

A coalition of IT staffing companies, the Small and Medium Enterprise Consortium, is moving forward with a lawsuit against the US Citizenship and Immigration Services over its policy that requires staffing companies seeking H-1B visas to provide workers’ full itineraries for the duration of their three-year visas, Bloomberg Law reported.

That requirement effectively bars them from the program, the companies say, because their business model requires that they have the flexibility to move workers around as needed. On Jan. 18, a federal judge in New Jersey refused to throw out the case, a move that the Small and Medium Enterprise Consortium’s attorney is calling a win that could lead to the policy’s demise.

The ACA Waiting Game
In December, a federal district court judge declared the Affordable Care Act to be unconstitutional in Texas v. United States. District Judge Reed O’Connor subsequently issued a stay on the ruling pending the outcome of the appeals process. The appeals. Federal district court decisions are not binding law. This case will surely be appealed to the Fifth Circuit Court of Appeals, and ultimately to the US Supreme Court. While the Supreme Court is not required to hear this case, the importance and national scope of the issue may prompt it to do so. A Supreme Court opinion could be two years or more down the road.

The ACA Waiting Game
While we wait. Staffing firms are now being charged penalties for not offering coverage or for not offering sufficiently rich and affordable coverage in 2015 and 2016. Judge O’Connor’s opinion held that the repeal of the individual mandate penalty tax, effective Jan. 1, 2019, triggers the unconstitutionality of the individual mandate itself and that, because the rest of ACA depends on the individual mandate, it also triggers the unconstitutionality of the entire ACA. That ruling, even if fully upheld, does not affect penalties for periods before 2019. The future effect of this decision, if it is upheld, may be only to invalidate the individual mandate, or it may be allowed to have greater effect by also invalidating the Act’s employer mandate, insurance provisions, taxes, and/or massive sections that regulate the healthcare industry in ways unrelated to health insurance.

Regardless of the net good or bad effects of the ACA, its indefinite status for the next two years would risk harming some Americans, even if it might preserve benefits for some others. The Trump Administration, following the Obama Administration’s history of issuing waivers and delays of portions of the ACA, could provide interim relief from some oppressive aspects of the law without directly challenging Judge O’Connor’s decision. Also, Congress theoretically could fix the problem, but that is unlikely because of the present gridlocked condition of Washington.

Until then, we’ll have to wait and see.

Source: “The ACA’s Post Constitutional Fate,” the Staffing Stream, by George M. Reardon, attorney