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US appeals court overturns Obama-era joint employer standards

A federal appeals court struck down joint employer standards adopted under the Obama administration that retail groups argued increased the industry's exposure to legal action and unionization efforts, Reuters reported.

The U.S. Court of Appeals for the D.C. Circuit ruled 2-1 on Dec. 28 that a 2015 decision by the National Labor Relations Board was too broad in defining the kind of "indirect control" over working conditions that could make companies joint employers of contract or franchise workers.

The 2015 decision stemmed from a case involving waste management company Browning-Ferris Industries and staffing firm Leadpoint Business Services, which had been contracted to clean and sort recycled products. The agency ruled that indirect control over the way work is performed could be enough to establish joint employment.

Industry groups argued that the decision left retailers and other companies liable for contractor and franchisee violations.

The board voted in December 2017 to reverse the standards, but it wiped out that decision two months later because a board member was found to have a conflict of interest. A new rule proposed in September and favored by retailers states that the joint-employer standard will apply to an employer if it possesses and exercises "substantial, direct and immediate control over the essential terms and conditions of employment of another employer's employees in a manner that is not limited and routine."