Think supply chain. Think franchisor. Think private equity.

For all these types of businesses, the rules of the game are changing. 

For a host of reasons – among them cost, efficiency, liability and risk management – many large companies have separated from the work force that performs the tasks associated with the end-delivery of their products or services. Before, under established rules defining who is the employer for purposes of application of labor and employment laws, such companies could safely shield themselves from employer obligations. That is not so today. Today, this model is under attack. 

How did this change? 

The National Labor Relations Board, the US Department of Labor, the Equal Employment Opportunity Commission, various other federal and state agencies and, of course, a robust and invigorated plaintiff’s class action bar are advocating a liberalized definition of “joint employer.” The thinking behind this shift can be captured in this question raised by Professor David Weil, now the Administrator of the US Department of Labor, Wage and Hour Division:

“Are there ways to allow the beneficial aspects of business models built on adherence to quality and consumer service standards to also assure that they meet their obligations under the law to employees?”

It is a loaded question and one that, today, points the barrel squarely at many companies.