United States: It's Back To The Future With The NLRB's New "Joint Employer" Standard

On August 27, 2015, the US National Labor Relations Board (NLRB or Board) issued its long awaited decision in Browning-Ferris Industries of California (Browning-Ferris) and, not surprisingly, returned employers to a pre-1984 world.

At issue in the case was the Board's "joint employer" standard under the National Labor Relations Act (NLRA). Enacted in 1935, the NLRA guarantees the rights of employees to organize, form unions and bargain collectively with employers. The Board, created by the NLRA, oversees the union organizing and campaign process, administers union representation elections, adjudicates labor-management disputes and determines whether employers have violated the NLRA. Statutory employers under the NLRA include both direct and putative "joint employers." The issue of "joint employer" status most often arises when a company hires a contractor to perform work over which the contracting company has some measure of control.

The Board's "joint employer" standard can be traced back to 1965 when the Board concluded that a company operating a bus terminal and its cleaning contractor were both employers of the contractor's employees because they "share[d], or co-determine[d], those matters governing essential terms and conditions of employment."1 The Third Circuit reaffirmed this standard in 1982.2

Prior to 1984, the Board interpreted "share or co-determine" to mean exercising, or reserving the right to exercise, direct or indirect control over the "terms and conditions" of employment.3 Beginning in 1984, however, the Board began to narrow the standard to require a showing that the employer "meaningfully affect[ed] matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction."4 Over time, that standard was further narrowed to include only "direct," "immediate" and "substantial" exercised control, and not "unexercised," "limited" or "routine" control.5

In Browning-Ferris, the Board re-examined this issue in the case of Browning-Ferris Industries, which operates a recycling facility in Milpitas, California, and the 300 employees who worked at its plant. Sixty of those workers were directly employed by Browning-Ferris, and the remaining 240 were employed by a staffing agency called Leadpoint Business Services. In 2013, a Teamsters union local filed a petition seeking to represent the 240 Leadpoint employees, arguing that Browning-Ferris and Leadpoint were joint employers. Applying the Board's post-1984 control test, the regional director found that Browning-Ferris was not a joint employer. The Teamsters filed a request with the Board for review, and in May 2014 the NLRB invited the submission of amicus briefs to address whether the Board should "adhere to its existing joint-employer standard or adopt a new standard." Numerous private parties submitted amicus briefs,6 and the NLRB general counsel filed an amicus brief advocating for a return to the Board's pre-1984 standard.

In a 3-2 decision, the NLRB overturned 30 years of precedent and returned to its pre-1984 standard. The Board specifically stated that the joint-employer inquiry should not be limited to "directly and immediately" exercised control. Instead, a putative joint employer may be liable if it "possesses the authority to control employees' terms and conditions of employment" regardless of whether such control is exercised. The Board also stated that "direct" and, if "otherwise sufficient, control exercised indirectly—such as through an intermediary—may establish joint-employer status." According to the Board, this change was necessary because (1) the Board's post-1984 limitations on the phrase "share or co-determine" had no basis in law; and (2) the new standard will bring the Board's approach in line with "changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships."

The Board did not expand the phrase "terms and conditions" beyond that already endorsed by Board precedent. These "terms and conditions" include, but are not limited to, hiring, firing, discipline, supervision, direction, wages and hours, dictating the number of workers to be supplied, controlling scheduling, seniority, overtime, assigning work and determining the manner and method of work performance.

What Does This Mean?

  • The immediate impact of this decision will be felt by companies using franchising, contracting, outsourcing and staffing agency labor. There is already an intense lobbying effort underway in Congress to reject this decision through legislation, and the decision will most likely be challenged in court. How the Board's decision will impact those businesses already in the general counsel's cross-hairs, however, remains to be seen.
  • The decision could spell trouble for temporary employment agencies and the companies using their services. Under current NLRB rules, a union can organize a bargaining unit of temporary employees and regular employees only if both employers consent.7 While the NLRB general counsel has stated that the new Browning-Ferris "joint employer" standard will not "implicate" this rule,8 the Board has recently decided to revisit the issue. On July 7, 2015, the NLRB invited briefs to address whether the Board should return to a standard of permitting the inclusion of both solely and jointly employed employees in the same unit without the consent of the employers. If the NLRB does, that could expand the influence of Browning-Ferris. Even if the Board does not revisit this rule, temporary staffing agencies and their clients could find themselves to be joint employers of the agencies' temporary workers under this new decision.
  • This decision will likely also impact other areas of the law. The "joint employer" standard imposed by the Board under the NLRA is just one of many "joint employer" standards that may impact companies. The Fair Labor Standards Act (FLSA), Title VII of the Civil Rights Act of 1964 (Title VII), the Americans with Disabilities Act of 1990 (ADA) and the Age Discrimination in Employment Act (ADEA) all have been interpreted to impose "joint employer" liability. Those statutes, however, almost uniformly require the exercise of direct control over employees' day-to-day activities for "joint employer" liability to attach. The Board's new Browning-Ferris standard may influence the agencies charged with their enforcement, particularly the Department of Labor's Wage and Hour Division and the Equal Employment Opportunity Commission (EEOC). Both agencies have signaled a desire to revisit the issue.9 And, most recently, just days in advance of the Board's Browning-Ferris decision, an Occupational Safety & Health Administration draft memorandum leaked out indicating the agency's interest in pursuing "joint employer" cases against franchisors and their franchisees.

Whether your business is impacted by Browning-Ferris, or whether you are dealing with other contingent employment issues such as the impact of using independent contractors or unpaid interns, the Global Employment and Labor practice group at Dentons is ready to help you navigate these complicated areas of the law.

Footnotes

1. Greyhound Corp., 153 NLRB 1488, 1489 (1965), enfd. 368 F.2d 778 (5th Cir. 1966).

2. NLRB v. Browning-Ferris Industries of Pennsylvania, Inc., 691 F.2d 1117, 1123 (3d Cir. 1983), enfg. 259 NLRB 148 (1981).

3. See, e.g., Floyd Epperson, 202 NLRB 23, 23 (1973), enfd. 491 F.2d 1390 (6th Cir. 1974); see also Hoskins Ready-Mix Concrete, 161 NLRB 1492, 1493 n. 2 (1966).

4. TLI, Inc., 271 NLRB 298, 298-99 (1984).

5. Airborne Express, 338 NLRB 597, n. 1 (2002); Goodyear Tire & Rubber Co., 312 NLRB 674, 677-78, 687-90 (1993); AM Property Holding Corp., 350 NLRB 1000, 1001 (2007).

6. One such brief was submitted by the Retail Litigation Center with the assistance of Dentons US LLP.

7. Oakwood Care Center, 343 NLRB 659 (2004).

8. General counsel amicus brief, Browning-Ferris at p. 17.

9. The Department of Labor's Wage and Hour Division has stated its desire to address "fissuring" in franchising and subcontracting relationships, and the EEOC filed an amicus brief in Browning-Ferris asking the Board to adopt the pre-1984 control standard.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
24 Oct 2017, Seminar, Washington, DC, United States

The Dentons Forum for Women Executives invites you to join us for a luncheon featuring guest speaker Liza Mundy, journalist and author. Ms. Mundy recently released her latest book, Code Girls, the riveting untold story of more than 10,000 spirited young American women who cracked German and Japanese codes to help win World War II.

27 Oct 2017, Seminar, New York, United States

Please join us for a milestone event, our 10th annual CLE Seminar for In-House Counsel.

1 Nov 2017, Seminar, Washington, DC, United States

Celebrate the 58th anniversary of Dentons' Government Contracts practice

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.