United States: NLRB Adopts New Broader Joint-Employer Standard

Executive Summary: On August 27, 2015, the National Labor Relations Board (NLRB or Board) issued its long-awaited decision in Browning-Ferris Industries (BFI) substantially changing and expanding the standard for finding a joint-employer relationship under the National Labor Relations Act (NLRA).

The previous test had been whether two entities share the ability to directly and immediately control or determine essential terms and conditions of employment such as hiring, discipline, termination, suspension and direction.

Citing the significant expansion in the diversity of workplace arrangements in today's economy and that the Board's joint-employer jurisprudence is increasingly out of step with changing economic circumstances, the NLRB's three Democratic members created a new standard over the vigorous dissent of the two Republican members.

The majority said that under common-law principles the right to control is probative of an employment relationship – whether or not that right is exercised. Under the new standard a joint-employer relationship will be found if the alleged joint-employers possess, exercise or simply retain the right, directly or indirectly, to control essential terms and conditions of employment, even if that control is not exercised.

The case arose at a BFI plant in California. BFI uses a subcontractor doing business as Leadpoint Business Services to provide recycling service workers at the plant. A Teamsters local had sought to organize those workers. Citing the existing Board standard, the Regional Director of the NLRB had rejected the union's arguments that BFI is the joint employer of approximately 240 workers provided by Leadpoint under a labor services agreement. The Regional Director's determination that an election should proceed against Leadpoint only as the employer was appealed to the NLRB.

Applying the new standard, the NLRB ruled that BFI is an employer under common-law principles and that it shares or codetermines matters governing the essential terms and conditions of employment for Leadpoint's employees. The NLRB relied on the following factors in reaching that conclusion: hiring, firing, discipline, suspension, direction of work, hours and wages.

The new test is not as expansive as the one proposed by the NLRB's General Counsel. The NLRB did not adopt a standard based on "industrial realities" rather than the common-law test. The NLRB also did not adopt a standard based on how potential joint-employers structure their commercial dealings with each other. Finally, the NLRB rejected the General Counsel's "sufficient influence" standard stating "sufficient influence" is not enough if it does not amount to control.

The dissent argued, among other things, that the majority decision exceeds the limits of the NLRB's statutory authority. The dissent stated "the new joint-employer test fundamentally alters the law applicable to user-supplier, lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer business relationships" under the NLRA.

The majority rejected the dissenters' criticism that the new standard fundamentally alters the law regarding various legal relationships between different entities. The majority said that all of those situations were not before the NLRB. In particular, the Board stated that none of the particularized features of franchisor/franchisee relationships were present in the case. Only the specific user-supplier relationship between BFI and Leadpoint was at issue. Further, the majority noted that joint-employer determinations are fact specific and must be determined on a case-by-case basis.

The dissent responded that the NLRB has maintained a unitary joint-employer test for all types of employer relationships. There is now a single new test, and it likely will be applied to all the business relationships listed by the dissent.

The new standard can be challenged in a federal court of appeals by BFI or some other employer subjected to the new standard. It could take a year or longer to get a court ruling. Efforts may be made in Congress to undo the decision. However, legislation is unlikely to have enough Democratic support to overcome a Senate filibuster.

The NLRB will apply this new test to joint-employer issues in matters before the NLRB such as union elections and unfair labor practice charges, including cases against franchisors and franchisees accusing them of illegally firing, threatening or otherwise retaliating against workers who have engaged in walkouts and other activities protesting their wages and seeking an increase to $15 per hour.

Expansion of the New Joint-Employer Standard to Other Laws

There is a concern that an expanded joint-employer standard will spread to other federal agencies analyzing the employment relationship. A draft memo circulating within OSHA shortly before the NLRB decision discussed looking at the potential for a joint-employer relationship between franchisors and franchisees when investigating workplace safety. The memo says "While the franchisor and franchisee may appear to be separate and independent employers, a joint-employer standard may apply where the corporate entity exercises direct or indirect control over working conditions, has the unexercised potential to control working conditions or based on the economic realities." In making a joint-employer determination OSHA will review: the overall relationship between the franchisor and the franchisee; written documentation of franchisor direction and control of the franchisee; franchisor control over the essential terms and conditions of employment of the workers at the franchisee; and franchisor control over safety and health policies and practices at the franchisee.

Employers' Bottom Line

The outer limits of how expansive the NLRB's new joint-employer standard is will be determined on a case-by-case basis. Businesses should evaluate their other business relationships and review documents related to them. Employers that want to avoid a joint-employer finding should ensure that they do not directly or indirectly control or have the right to control essential terms and conditions of employment. Franchisors should avoid control over a franchised operation beyond that necessary to protect the franchisor's trade name, professional methods, customer goodwill or commercial image.

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