United States: National Labor Relations Board Adopts Expansive New Joint Employer Standard

In a highly anticipated decision, the National Labor Relations Board (the "Board" or "NLRB") reversed more than 30 years of established precedent and liberalized the standard for determining whether two or more entities are joint employers for purposes of the National Labor Relations Act (the "Act"). Browning-Ferris Indus. of Cal., Inc., 362 NLRB No. 186 (Aug. 27, 2015). Since 1984, the NLRB has required proof of a significant or substantial degree of "direct and immediate" control, not merely potential control, by a putative joint employer over the hiring, firing, discipline, supervision, and direction of employment of another company's employees before finding that a joint employer relationship exists. However, in Browning-Ferris Indus. of Cal., Inc., the Board, in a 3-to-2 decision, substantially modified that standard to lower the evidentiary threshold necessary to establish a joint employer relationship for purposes of the Act. It held:

"[T]he Board may find that two or more statutory employers are joint employers of the same statutory employees if they "share or codetermine those matters governing the essential terms and conditions of employment." In determining whether a putative joint employer meets this standard, the initial inquiry is whether there is a common-law employment relationship with the employees in question. If this common-law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses sufficient control over employees' essential terms and conditions of employment to permit meaningful collective bargaining."

Id. at 2 (internal citation omitted). The NLRB majority explained that "central to both of these inquiries is the existence, extent, and object of the putative joint employer's control." Id. The majority proceeded to substantially relax the level of control that a putative employer needs to exert to establish a joint employer relationship:

"We will no longer require that a joint employer not only possess the authority to control employees' terms and conditions of employment, but also exercise that authority. Reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry.... Nor will we require that, to be relevant to the joint-employer inquiry, a statutory employer's control must be exercised directly and immediately. If otherwise sufficient, control exercised indirectly—such as through an intermediary—may establish joint-employer status."

Id. (emphasis in original). In so holding, the Board explicitly overruled several well-established cases including Laerco, TLI, and Airborne Express. Id. at 16. The Board relied heavily on the recent growth of the contingent workforce (e.g., staffing and subcontracting arrangements) to justify its departure from these precedents. Id. at 11. Thus, in the majority's view, its decision advances the Act's policy of encouraging collective bargaining because its redefined joint employer standard accounts for "the full range of employment relationships wherein meaningful collective bargaining is, in fact, possible." Id. at 13.

A joint employer finding has the potential to greatly affect such businesses since the consequences of a joint employer finding by the Board include, but are not limited to:

  • Conferring joint and several liability on both companies for unfair labor practices committed by the direct employer, including both monetary and injunctive relief;
  • Requiring a company to engage in collective bargaining with, and provide access to information to, labor organizations representing the direct employer's employees; and
  • Allowing union activity on the property of a business (e.g., picketing, boycotting) that would otherwise be considered unlawful secondary activity in violation of Section 8(b)(4) of the Act.

The Browning Ferris Indus. of Cal. case involved a representation petition filed by the Teamsters union seeking to represent approximately 240 employees of a supplier, Leadpoint, who provided contract labor to staff a waste recycling plant operated by Browning-Ferris Industries ("BFI"). Initially, the NLRB's Regional Director concluded that the employees covered by the union's petition were Leadpoint employees, not employees of BFI. In reversing the Regional Director's decision, the Board concluded that BFI and Leadpoint were joint employers of the Leadpoint employees, notwithstanding substantial evidence demonstrating that BFI did not share, or co-determine, those matters governing the essential terms and employment of those Leadpoint employees:

  • "BFI and Leadpoint employ separate supervisors and lead workers at the facility." Id. at 3.
  • "The Agreement between BFI and Leadpoint provides that Leadpoint will recruit, interview, test, select, and hire personnel to perform work for BFI. BFI managers ... testified that they are not involved in Leadpoint's hiring procedure and have no input into Leadpoint's hiring decisions." Id.
  • Leadpoint determines the wages and benefits to provide its employees. Id. at 4.
  • "Leadpoint alone schedules which employees will work each shift...." Id.

In concluding that BFI and Leadpoint were joint employers, the NLRB majority largely disregarded these facts and instead emphasized the following ways in which BFI had some involvement in the employment of Leadpoint's employees:

  • "Although BFI does not participate in Leadpoint's day-to-day hiring process ... BFI retains the right to reject any worker that Leadpoint refers to its facility." Id. at 18.
  • "Although Leadpoint is responsible for selecting the specific employees who will work during a particular shift, it is BFI that makes the core staffing and operation decisions that define all employees' work days." Id. at 19.
  • "Under the parties' contract, Leadpoint determines employees' pay rates, administers all payments, retains payroll records, and is solely responsible for providing and administering benefits. But BFI specifically prevents Leadpoint from paying employees more than BFI employees performing comparable work ... In addition, BFI and Leadpoint are parties to a cost-plus contract, under which BFI is required to reimburse Leadpoint for labor costs plus a specified markup." Id.

As a result of that finding, if the union prevails in the representation election, both BFI and Leadpoint will be required to bargain with Teamsters over the terms and conditions of employment for the Leadpoint employees.

In a scathing nearly 30-page dissent, Members Miscimarra and Johnson attacked what they referred to as "the most sweeping of recent major decisions" and argue that "the Board majority rewrites the decades-old test for determining who the 'employer' is." Id. at 21. The dissent noted:

"This [decision] will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing...."

"This new test leaves employees, unions, and employers in a position where there can be no certainty or predictability regarding the identity of the "employer...."

"The number of contractual relationships now potentially encompassed within the majority's new standard appears to be virtually unlimited: insurance companies that require employers to take certain actions with employees in order to comply with policy requirements of safety, security, health, etc.; [f]ranchisors; [b]anks or other lenders whose financing terms may require certain performance measurements; [a]ny company that negotiates specific quality or product requirements; [a]ny company that grants access to its facilities for a contractor to perform services there...; [a]ny company that is concerned about the quality of the contracted services; [and] [c]onsumers or small businesses who dictate times, manner, and some methods of performance of contractors." Id. at 21-37.

Companies should take note of the majority's definition of "joint employer" and evaluate how it may affect their operations. If a company is found to be a joint employer, it may be subjected to statutory collective bargaining obligations with respect to their contracting partners' employees as well as liability for unfair labor practices committed by those businesses with which they contract. Businesses could also be subject to picketing, boycotts, and other protest activities that, absent the joint employer finding, would otherwise be unlawful secondary activity.

Businesses should continue to monitor developments in the Board's joint employer standard, since the new standard is inconsistent with the joint employer standard in other contexts such as Title VII and the Fair Labor Standards Act, and it is unclear whether a circuit court, if presented with an opportunity to review the revised standard, will uphold it.

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
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions