In combination, employment policies can create “the straw that broke the camel’s back” situations, and their interactions can put them at cross purposes with each other. The U.S. Chamber of Commerce has recently released a few reports on employment policies that illustrate this.

First, the Chamber looks at how employment regulations affect California’s economy. Some of the findings are more broadly applicable—for example, the report finds that “There is an inverse relationship between the level of state employment regulation and economic performance.” Additionally, it notes that

. . . the weight of the evidence indicates that there is a significant connection between labor market regulation and economic performance. Indeed, the evidence suggests that an increasing thicket of labor and employment mandates is jeopardizing the long-run performance of California’s economy.

The paper considers policies like the minimum wage, unemployment insurance, workers’ compensation, and wage and hour policies. It notes that although California’s sunny climate and other advantages may have outweighed the state’s much less attractive regulatory climate, it does not follow that that will always be the case.

In 2012, we wrote about Washington’s many labor policy mandates:

As each is considered on a piecemeal basis, their cumulative effect is easy to overlook. Employers cannot afford to discount these costs, however. The economics—the math—is straightforward. And as employers run the calculations, Washington becomes less competitive.

Second, the Chamber and the International Franchise Association (IFA) released a report last month on the joint employer standard. Over the past few years, the National Labor Relations Board (NLRB) has broadened the definition of “joint-employer”—both as regards franchisees and franchisors and companies that contract with other companies.

In the second case, the NLRB ruled that Browning-Ferris Industries (BFI) was a joint employer with its contractor Leadpoint. BFI is appealing the ruling in the U.S. Court of Appeals for the D.C. Circuit. As Reuters summarized, the ruling “could make it easier for unions and regulators to hold companies accountable for the practices of staffing agencies, contractors and franchisees with which they partner.” Also,

In that ruling, the NLRB had said an existing standard that companies only qualify as "joint employers" of workers hired by another business if they had "direct and immediate" control over employment matters was outdated, and did not reflect the realities of the 21st century work force.

The ruling said parent companies can be held liable for labor violations committed by franchisees and contractors even when they have only indirect or unexercised control over employment conditions.

The Chamber/IFA report argues,

While an expansive view of joint employment may have been conceived by a small group of activists and union leaders, it now influences government policy at the federal, state, and local levels. . . . In essence, what was once viewed simply as a labor issue is now a local small business and jobs issue.

This new interpretation will “have a chilling effect on the franchise industry.” As a result of the NLRB rulings, “Some franchisors, for example, have decided that they must pull back on the services they offer franchisees.” And, “Other businesses are simply deciding to hold off on opening new franchise locations.”

The paper warns that the BFI standard may be used for threshold employer coverage (many laws only apply if employers have a certain number of employees), discrimination law, wage and hour issues, Occupational Safety and Health Administration issues, and Affordable Care Act issues.

Meanwhile, Microsoft has filed a brief in the BFI appeal asking the court to reverse the decision. In 2015, Microsoft announced that it would require its large suppliers to provide paid leave to their employees (who work on Microsoft projects). But, since announcing the new policy,

a union representing employees of one of Microsoft’s suppliers demanded that Microsoft engage in collective bargaining with the union. Relying on BFI, and citing Microsoft’s paid leave eligibility criteria for suppliers, the union argued that Microsoft was now a “joint employer” subject to the National Labor Relations Act’s collective bargaining requirements. Microsoft declined on the basis that it is not a joint employer of the supplier’s employees. The union responded by filing an unfair labor practice charge against Microsoft with the NLRB. That charge remains pending. Microsoft’s [corporate social responsibility (CSR)] efforts have thus lead to substantial and growing legal expenses and great uncertainty.

Further, “Companies with existing CSR initiatives now have a strong incentive to terminate them, and others considering such policies will be more likely to table their plans.”

As the brief summarizes,

Thus, on one hand, the United States President has praised Microsoft for its market-leading CSR initiative that predicates supplier eligibility on the suppliers’ provision of paid leave to their workers, and encourages others to do the same. On the other hand, the NLRB has adopted a joint employment standard that encourages unions to use the same policy to bring an unfair labor practices claim against Microsoft and against other companies that create similar CSR initiatives establishing eligibility criteria for suppliers.

Sometimes you can't win for trying.