The Hospitality Industry Under the Trump Administration
Reasons for Optimism
By Dana Kravetz Managing Partner, Michelman & Robinson, LLP | August 06, 2017
Pro-employer stars are aligning in Washington, D.C., that can only benefit the hospitality industry. What began with President Donald J. Trump's appointment of conservative Alexander Acosta as the United States Secretary of Labor, has been followed by his nomination of Republicans Marvin Kaplan and William Emanuel to fill vacancies on the National Labor Relations Board – moves that are decidedly a boon to business. Under Secretary Acosta, the Department of Labor withdrew guidance put in place by the Obama administration on the joint employment issue, a positive step for hotel and resort owners, operators and franchisors. If confirmed, Messrs. Kaplan's and Emanuel's presence on the NLRB is certain to lead to the unraveling of various labor-related actions also deemed unfavorable to employers, hoteliers included.
Add to this the anticipated decision by the U.S. Court of Appeals for the District of Columbia Circuit in Browning-Ferris Industries of California, Inc. (BFI) – by which the court may reverse course on the current union-friendly standard for determining joint employment status under the National Labor Relations Act – as well as the recent introduction of a bill in Congress to limit the definition of joint employment under federal wage and labor law, and there can be no doubt that the labor-leaning tides in D.C. are shifting indeed.
By virtue of the changing of the guard in Washington – including a reshaped NLRB – joint employer liability and a breadth of associated union issues are squarely in the crosshairs of an administration bent on giving employers a leg up. Good news for those in the hospitality space to be sure, as is President Trump's undeniable interest in hotels and resorts. But as a practical matter, how will the landscape change for hoteliers, particularly when current pro-employer sentiments in our nation's capital are held in check by state and local activism that serves to protect employee interests?
Rescission of Obama-Era Guidance Defining Joint-Employers
The Labor Department's rollback of guidelines established by the Obama administration to determine when companies are joint employers of contract and franchise workers – the first change of labor policy under President Trump – was not unexpected and is a great indicator of things to come. The move narrows the previous joint employment standard that took into consideration a worker's level of "economic dependence" on a company and subjected franchisors to lawsuits even when they were not responsible for setting working conditions. In the wake of the DOL's action, these companies are once again deemed joint employers only when they have a role in hiring, firing and wage and supervision decisions – a cause for muted celebration among hotel and resort owners and operators.
Full-fledged cheers would be premature because the withdrawal of the guidance does not affect the NLRB's expansion of joint employment liability as articulated in BFI, which drastically eased the criteria for a company to be considered a joint employer. In lieu of the longstanding and traditional joint employer test that focused on governance, wage and supervision decisions and control, the NLRB in BFI adopted a much more lenient standard requiring that a business merely exercise "indirect" (or potential) control over workers to be held liable for labor violations committed by franchisees and contractors. However, given the political winds blowing at the moment, the position taken by the pre-Trump board in BFI will likely be short-lived.
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