The revised standard is designed “to better effectuate the purposes of the [Joint Employment] Act in the current economic landscape,” according to an NLRB release, explaining the board’s decision, which fell along party lines with three Democrats affirming and two Republicans opposing. While the board declined a request for an interview, the release went on to say that the previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances.
The vast majority of home construction is carried out by subcontractors. While the larger, public homebuilders have more specialty workers on staff, they still contract a significant amount of their work out to subs.
“Are we concerned that this ruling might have some impact? I think we are alert to the ruling. We are aware that the Labor Department feels its mandate is broad, but we think that our business is highly differentiated from what’s being discussed in the current case or even extensions,” said Stuart Miller, CEO of Miami-based Lennar.
Among larger builders, a subcontractor could work for Lennar one day and Pulte the next, so it is still unclear how the new ruling would apply.
“Right now we are still evaluating it, and we are concerned when you overturn 30 years of precedent overnight,” said Ken Gear, an attorney with the Leading Builders of America, an association formed by some of the nation’s largest public homebuilders in 2009. “It does create uncertainty, and that’s never a good thing when you’re trying to run a business, but right now we don’t know how disruptive this could be.”