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Right Hooks

What Is a Joint Employer? The Implications Are Huge

Leveling the regulatory pen against small business and the gig economy.

Dan Gilmore · Jan. 22, 2016
The McDonalds restaurant at Guantanamo Bay, Cuba

National Review’s Iain Murray called the latest move by the Department of Labor “effectively … ruling by decree.” The department issued an “administrator’s interpretation” of what defines a joint employer. Sounds obscure, like bureaucratic busy work in between the games of Solitaire, right? Except that a burger flipper at McDonald’s, anyone working at a temp agency or even employees working for a small business servicing a larger company could fall under the new interpretation. This means that if a fast-food worker wants to unionize for $15-an-hour wages or a temp agency has been shorting their employees’ wages, the larger company might be held liable.

In issuing this interpretation, the Department of Labor is leveling its regulatory pens against small businesses and the gig economy that gives so many Americans employment. “This is particularly rich given that a fifth of the jobs created over the past few years have been the sort of jobs that would not exist but for these arrangements,” Murray wrote. “The administration is trying to kill the job growth it claims credit for creating.”

Furthermore, the House Education and Workforce Committee sent a letter this week to Labor Secretary Tom Perez saying it had evidence that the Labor Department worked with the National Labor Relations Board to issue the new interpretation. The NLRB is currently pursuing a case against McDonald’s, arguing that while most restaurants are owned by franchises, the employees actually work for the national company. This is particularly troubling because this is interpretation will stick around for longer than Obama’s administration, affecting how businesses make associations. For this to change, it will take an act of Congress.

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