United States: NLRB'S New Joint Employer Standard Creates Enormous Uncertainty

Late last week, the National Labor Relations Board published a decision that will make many business leaders' heads spin. By pronouncing a new legal standard to be used to determine if a business is a "joint employer" of another's employees, the Board has created an unprecedented amount of uncertainty for all types of businesses. Under this new standard, employers may have new obligations and liabilities under federal labor law in relation to employees of a variety of other companies with which they do business – their contractors, their suppliers, their franchisees, their subsidiaries, and more.

The Board's new "joint employer" standard is incredibly broad and vague. In recasting the joint employer test, the Board rejected a 30-year old legal standard that focused on the actual exercise of direct control over another business' employees. Instead, it has declared that "joint employer" status can be created by the mere possession of authority to control some essential term or condition of employment of another business' employees, even if that authority is never actually exercised, and that this analysis includes indirect as well as direct control. Predictably, the Board split along members from different political parties, with the two Republican Board Members dissenting. At the outset of an extensive dissenting opinion, the dissenters summarized the problematic consequences of the majority's new legal standard as follows:

The change 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.

Given the enormous ramifications of the Board's decision, at this early juncture we can only summarize the Board's ruling and begin to identify some of the prominent unanswered questions among the myriad concerns created by this ground-breaking decision. Soon, we will follow up and provide some practical guidance to businesses that can be used to begin to assess their particular vulnerabilities and solutions. But first, the new challenge should be understood.

The Case Background

Browning-Ferris (B-F) operates a recycling facility in Newby Island, California at which it employs 60 persons who are represented by the Teamsters. B-F has a labor services agreement with a supplier named Leadpoint. Pursuant to that agreement, Leadpoint provides workers who perform tasks at B-F's facility, such as sorting recycled materials, maintaining the screens used in the sorting equipment, and cleaning the facility. The Union sought to represent the 240 persons supplied by Leadpoint who work at B-F's facility.

In its management of the union election process, the Board's Regional Director concluded that B-F was not a joint employer of the Leadpoint employees because it does not "share or codetermine [with Leadpoint] those matters governing the essential terms and conditions of employment" of those performing the sorting and cleaning tasks. In making the "joint employer" analysis, the Regional Director followed 30-year old Board precedent that has never been questioned or criticized by any federal courts.

The Union appealed that ruling to the five-member Board, making two distinct arguments. First, the Union asked the NLRB to reverse the Regional Director's decision by finding that B-F was a "joint employer" under the traditional precedent. Second, and alternatively, the Union asked the NLRB to adopt a broader standard for determining when a company is a "joint employer" and shares labor law obligations with another business, and to find that B-F was a "joint employer" under whatever new standard the Board might adopt. The Board never bothered to assess the case under its own joint employer precedent and did not rule on the Union's first argument. Instead, it gave the Union (and all other unions throughout the country) everything it could have dreamed of in relation to its second request.

The New Joint Employer Standard

The Board may now find that two or more businesses are joint employers of the same employees if they "share or codetermine those matters governing the essential terms and conditions of employment." To determine if a business is a joint employer, the Board first looks at whether it has a common-law employment relationship with the employees in question. Next, it determines if the business possesses sufficient control over the employees' essential terms and conditions of employment to permit meaningful collective bargaining.

This new standard radically departs from the historical standard in two ways. First, the Board no longer requires an actual exercise of authority over terms of employment—the mere possession of authority is enough to support a finding of "joint employer." Second, the Board will consider control exercised indirectly, through intermediaries, whereas the previous standard required a showing of control that was exercised in a manner that was "direct and immediate."

The NLRB claimed it intended to restate the joint-employer standard to best serve the federal policy of "encouraging the practice and procedure of collective bargaining." The Board noted that the diversity of workplace arrangements has significantly expanded in today's economy, and emphasized that a primary function of the Board is to apply the federal labor law "to the complexities of industrial life."

The Board's Application of the New Standard

The Board concluded that B-F was the joint employer of Leadpoint's employees assigned to work at the B-F facility. Frankly, B-F's purported "control" of Leadpoint's employees was fairly typical of a manufacturer using contracted employees, but under the new standard the Board concluded that the authority B-F possessed was sufficient to make it a joint employer. As examples, the Board pointed to the fact that B-F retained control over who Leadpoint could hire to work at B-F's facility, prohibiting applicants who failed a drug screen or had been previously deemed by B-F to be ineligible for rehire. The Board also noted B-F's control over the pace of the work. Specifically, B-F maintained unilateral control over the speed of the production lines on which the sorter employees worked, and even specified where Leadpoint employees would be positioned on those lines. Furthermore, B-F dictated the time of the work shift and determined when a line would operate on overtime. The Board also noted B-F's impact on the employees' wages through a provision that required Leadpoint to obtain B-F's approval for wage increases under the parties' "cost-plus" contract.

Some of the New Challenges

The dissent lists a variety of business relationships that are "fundamentally altered" by the Board's new joint-employer standard:

  • User-supplier
  • Lessor-lessee
  • Parent-subsidiary
  • Contractor-subcontractor
  • Franchisor-franchisee
  • Predecessor-successor
  • Creditor-debtor

The dissent also notes that the new standard "does violence" to the secondary boycott provisions of the labor law. Because more companies will be deemed to be joint employers in more circumstances, they will now be subject to more strikes, boycotts and picketing by unions that is only permissible against the "primary" employer with which a union has a labor dispute. Now, for example, a union that has a labor dispute with a franchisee business may strike, boycott or picket the franchisor if it can show the franchisor is a "joint employer" under the new standard.

What's Next

Presumably B-F will challenge the Board's ruling in court, but a court decision will likely take a year or more. In the meantime, businesses would be wise to begin an assessment of their contracts and relationships with employment agencies and other companies to determine the extent that they possess some authority to control, directly or indirectly, the terms and conditions of the other business' employees. Stay tuned for additional guidance in the days to come.

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.

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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.


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.


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.


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.


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.


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.


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.