On Thursday, August 27, the National Labor Relations Board
("NLRB" or the "Board") issued its ruling in
Browning-Ferris Industries of California, Inc., altering
decades of precedent about the standard required to be held as a
joint employer under the National Labor Relations Act
("NLRA"). This ruling only applies to determining whether
an entity is a joint employer for purposes of the NLRA, but could
be adopted by other government agencies.
Prior to Thursday's ruling, an employer could be a "joint
employer" only where it both possessed and actually exercised
direct and immediate control over the terms and conditions of
employment. Now a company can be considered a joint employer under
the NLRA if it merely has the potential to exercise control over
working conditions. The Board will now determine whether an
employer can influence the essential terms and conditions of the
employment, either directly or indirectly. Under the new standard,
the NLRB expanded its consideration of the essential terms and
conditions to include "dictating the number of workers to be
supplied; controlling scheduling, seniority, and overtime; and
assigning work and determining the manner and method of work
performance," in addition to influence over hiring, firing,
and supervising employees.
Browning-Ferris Industries, which operates a recycling facility,
and Leadpoint, a temporary staffing agency that supplied employees
to Browning-Ferris, entered into a staffing agreement identifying
Leadpoint as the employees' sole employer. Leadpoint was
responsible for all disciplinary matters of those employees, hired
and fired them, and determined their wages, although
Browning-Ferris Industries could prohibit employees from continuing
to work at the facility and set upper limits on certain
employees' wages. The Board determined that under the
circumstances presented, Browning-Ferris Industries and Leadpoint
were joint employers because they both maintained authority to
control the workers' employment – even if Browning-Ferris
Industries never exercised that authority.
In issuing its ruling, the NLRB found the previous joint employer
standard "narrower than statutorily necessary," and
reiterated its view that the definition of employer should be
expanded so as to capture as many employment relationships as
possible. The dissenting members cautioned that the ruling would
subject companies to new joint-bargaining obligations and increased
potential risk for joint liability of unfair labor practices
claims. For example, the Board's position could force joint
employers with divergent interests into a difficult bargaining
situation, or could result in one joint employer facing liability
for the unfair labor practices of another joint employer.
The Board's decision represents a significant departure from
long-standing precedent, and will impact employers who use staffing
agencies, franchisees, or other contractual relationships to
facilitate on-site work – not just franchise models such as
fast food restaurants.
In light of the Board's decision, employers should review and
reconsider their business practices and contractual relationships
to determine whether they are likely to be considered a joint
employer under the new standard. It is expected that other federal
agencies (such as the Occupational Safety and Health
Administration) will consider this new standard when imposing
liability.
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