Much has been written, including on this blog, about the perceived uptick in the amount of executive actions President Obama’s admininstration is taking to change policy without going through Congress first. President Obama is certainly not the first, nor is he likely to be the last President to look for every opportunity administratively to advance his agenda. Moreover, some analyses indicate that despite the “narrative” that changing law through executive action is on the rise, the hard numbers indicate that President Obama has signed less Executive Orders than past presidents.
But when it comes to the work of two key agencies charged with regulations governing the workforce, it’s not simply a question of how many executive actions have been taken, but their substance as well.
Over the past two years, the Occupational Health and Safety Admininstration housed in the Department of Labor and the “independent” National Labor Relations Board have effectively changed the law, not through Congress or even a formal rulemaking, but through underground agency actions. Moreover, both of these policy changes upend decades of labor and employment law with a stroke of a pen.
OSHA’s Underground “Union Walk Around Rule”
On Feburary 21, 2013, Former Deputy Assistant Secretary for the Occupational Safety and Health Administration (OSHA), Richard Fairfax, announced OSHA’s new “union walk around rule” in a controversial opinion letter responding to a a union official. The so-called “Fairfax Memo” concludes that an employee may ask that a union official accompany OSHA officials during safety inspections of a worksite, regardless of whether the company is unionized or has a collective bargaining agreement in place. Accordingly, the Fairfax Memo provides that a union representative may accompany an OSHA inspector as the employee’s “personal representative,” provided that the employees have requested the union official’s presence and the OSHA inspector agrees to allow it. But the employer is given no say in the arrangement. Under the Fairfax Memo, employers must allow union officials to walk around the worksite with OSHA inspectors.
But the plain text of the Occupational Safety and Health Administration Act specifically limits third-party, non-employees when “good cause” has been shown and is reasonably necessary for an effective and thorough inspection.
The Fairfax Memo’s blanket conclusion that union representatives may be present runs contrary to that understanding and OSHA’s interpretation of the statute, regulations, and Field Manual (See Maury Baskin’s testimony at this hearing). Indeed, it would seem inappropriate to assume that the presence of a union official will necessarily do anyting to facilitate a proper inspection—much less may the presence be deemed “necessary” for “an effective and thorough physical inspection.” This significant change of longstanding OSHA policy was implemented without any notice to the public or opportunity to comment in violation of the Administrative Procedures Act. Finally, the Fairfax Memo raises constitutional concerns since it requires business owners to allow physical invasions of their property by parties who are not essential to an administrative inspection.
NLRB Proposes to Change Rules on Joint-Employers
On August 27, in the case of Browning-Ferris Industries of California, Inc., the National Labor Relations Board (NLRB) fundamentally changed the definition of “joint-employer.” An entity is a joint employer if it exercises direct and immediate control over another business’s employees, including having the ability to hire, fire, discipline, supervise, or direct an individual. Entities are joint employers only when they share that direct control over the terms and conditions of employment for the same employees. Prior to this decision, the vast majority of companies using subcontractors to provide certain services did not have to worry about being considered a joint employer. The Browning-Ferris decision, however, puts that relationship in doubt.
Additionally, in May 2014, the National Labor Relations Board announced that it would treat McDonald’s USA LLC (“McDonalds”) and its franchisees as joint-employers. The decision to treat McDonalds as a joint-employer is highly controversial. As with Browning-Ferris, NLRB effectively announced new rules that will have far-reaching implications for businesses working with independent companies. NLRB’s new approach would treat franchisors as joint-employers with franchisees, or other independent contracting firms, so long as they exert “significant control” over the same employees—a standard that NLRB now argues can be satisfied simply by demonstrating that a franchisor has exerted significant control over everyday business operations, without regard to whether the franchisor has exercised any control over personnel decisions. This not only jeopardizes the entire franchisor-franchisee model, but it contravenes 30 years of case law establishing that a franchisor is not a joint-employer unless the franchisor actively exerts control over employment decisions, such as setting wages or disiplinary actions.
OSHA’s union walk around rule and NLRB’s proposal to broaden the joint-employer standard completely overturn decades of labor and employment law upon which businesses and workers have relied. Absent significant evidence that such fundamental legal changes are necessary, the executive should not change the law. If evidence suggests that such legal changes should be made, Congress – not unelected agency officials – should propose and consider them. Executive agencies should not be permitted to change decades of law for millions of businesses and workers through a memorandum or enforcement position. That is the constitutional system America’s founders envisioned and upon which America’s job creators rely.