United States: Employment Law Commentary - Volume 27, Issue 9

Last Updated: October 8 2015
Article by Eric A. Tate, Timothy F. Ryan and Caroline Stakim


By Eric A. Tate and Timothy F. Ryan

The short answer to the question is, "Not yet." Browning-Ferris Industries of California, Inc.1 expanded the definition of joint employer under the National Labor Relations Act (the "NLRA" or the "Act") and is arguably the National Labor Relations Board's (the "NLRB" or the "Board") most significant decision of 2015. Many believe that Browning-Ferris will have far-reaching effects for years to come, including beyond the unionized workplace. This article discusses the decision, selected key potential implications for employers, and takes a brief look at the early fallout from Browning-Ferris.

The Decision

On August 27, 2015, the three-member Democratic majority of the Board (in its own words) "modified the legal landscape for employers with respect to one federal statute, the National Labor Relations Act," specifically regarding the application of the joint employer standard. The Board recognized that the standard itself remained the same, specifically that "the 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.' The key inquiry in any joint employer analysis under the Act is the extent of the putative joint employer's control over the terms and condition of employment of the employees in question." But the Board announced a new application of that standard.

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.

In other words, under the Board's new joint employer test, an entity apparently can be deemed a joint employer if (1) it does not actually exercise any control over employees' terms and conditions of employment, but (based on a contract or otherwise) theoretically could at some undetermined point, or (2) it does not directly exercise any such control, but rather exercises control through a third party.

The underlying case involved employees of Leadpoint Business Services ("Leadpoint") who were assigned to work at BFI Newby Island Recyclery ("BFI") in Milipitas, California as sorters, screen cleaners, and housekeepers. A union petitioned to represent approximately 240 of these employees, naming both Leadpoint and BFI as employers. The NLRB Regional Director issued a decision finding that Leadpoint was the sole employer of the employees. The Union filed a request for review of that decision by the Board. And for reasons explained more fully below, the Board voted to overturn the Regional Director's decision and held that BFI was a joint employer with Leadpoint.

Not surprisingly, the 3-2 decision was along party lines, with the three Democratic members voting to expand the joint employer standard and the two Republican members in a spirited dissent voting to maintain the status quo. The politics of and debate between the majority and minority about what the existing joint employer standard was, and the extent to which the majority ruling was consistent with past precedent, is interesting. But we will focus in the next section on the factors that the Board relied upon in fashioning its decision, which should be useful to employers trying to assess how this ruling might impact their own workforces.

The Majority's Factors Demonstrating Joint Employer Relationship

We summarize below key facts the Board relied upon in finding that BFI was a joint employer.

Hiring, Firing, and Discipline. The Board found that BFI had significant control over hiring and firing at Leadpoint under their contract and had exercised that control on limited occasions. For instance, BFI required Leadpoint employees to pass drug tests and barred the hiring of individuals who previously had worked for BFI but who BFI had deemed ineligible for rehire. Further, while BFI claimed that it had never exercised them, under its contract with Leadpoint, BFI retained the rights to: (a) require that Leadpoint employees satisfy certain standard BFI selection procedures and tests, (b) reject any worker that Leadpoint referred to its facility "for any reason or no reason," and (c) "discontinue the use of any personnel" that Leadpoint had assigned.

Supervision, Direction of Work, and Hours. The Board also found that BFI exercised control over "the processes that shape" the day-to-day work of Leadpoint's employees. It noted as being of "particular importance" BFI's unilateral control over the speed of the streams and specific productivity standards for the waste and recyclable materials that the employees sorted. The Board noted that BFI managers told Leadpoint employees to work "faster and smarter" and frequently counseled them against stopping the stream of materials for sorting. Further, while communicating to Leadpoint employees through Leadpoint supervisors, BFI assigned specific tasks that needed to be completed, specified where Leadpoint employees were to be positioned, and provided near-constant oversight of employee work performance. Moreover, on many occasions, BFI managers met directly with Leadpoint employees and provided detailed work directions regarding the stream of materials, addressed customer complaints and business objectives, discussed preferred work practices, and assigned employees to tasks that took precedence over work assigned by a Leadpoint manager.

Additionally, the Board found that BFI specified the number of workers that it required, dictated the timing of work shifts, and decided when overtime would be necessary. And while BFI did not select the specific Leadpoint employees who would perform the work on any given shift, those employees were required to obtain the signature of an authorized BFI representative for their hours each week in order to get paid.

Wages. In addition, the Board found that BFI played a significant role in determining Leadpoint employee wages. Under the parties' contract, Leadpoint determined employee pay rates, administered payments, retained payroll records, and was responsible for employee benefits. Leadpoint was contractually barred from paying its employees more than any BFI employees performing the same work. Further, while recognizing that a "cost-plus" contract (where BFI reimbursed Leadpoint for labor costs plus a certain percentage markup) alone did not establish control, the Board stated that it could support a finding of joint control when coupled with the aforementioned ceiling on Leadpoint pay.

The Minority's Dissent

In an impassioned dissent, the two-member Republican minority stated that the majority's change in the joint employer standard 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.

In addition to discussing what it viewed as the errors in the majority's reasoning, the dissent highlighted several examples of a "virtually unlimited" range of contractual relationships that could be encompassed within the majority's expanded joint employer definition:

  • Insurance companies that require employers to take certain actions with employees in order to comply with policy requirements for safety, security, health, etc.;
  • Franchisors (see below);
  • Banks or other lenders whose financing terms may require certain performance measurements;
  • Any company that negotiates specific quality or product requirements;
  • Any company that grants access to its facilities for a contractor to perform services there and then continuously regulates the contractor's access to the property for the duration of the contract;
  • Any company that is concerned about the quality of the contracted services; and
  • Consumers or small businesses who dictate times, manner, and some methods of performance of contractors.

The dissent also raised the alarm that the majority did not substantively discuss the potential adverse consequences of such a "sweeping change in the law." In particular, the dissent noted that:

Indeed, [the majority] profess to limit themselves to the issue of joint bargaining obligations in the user-supplier context, with a disclaimer that their decision "does not modify any other legal doctrine or change the way that the Board's joint-employer doctrine interacts with other rules or restrictions under the Act.

One Month Later

While it is no doubt too early to tell for certain the long-term ramifications, we provide a brief look into the first month after the Browning-Ferris decision. On September 14, 2015, the Regional Director confirmed that Local 350, International Brotherhood of Teamsters, the union seeking recognition in Browning-Ferris (the "Union"), had won the election and certified the Union as the exclusive collective-bargaining representative of the Leadpoint employees. On September 25, 2015, the Union filed an unfair labor practice charge with the NLRB challenging the refusal of Republic Services Inc. (the successor company to BFI) to bargain with the Union. The refusal to bargain puts the parties on track to ultimately have the NLRB's expanded joint employer definition reviewed by the Court of Appeals.

Through September 27, 2015, there has been one Board decision and one decision by an administrative law judge regarding joint employer status, neither of which cited Browning-Ferris. Likewise, there have been 15 court decisions in which the court actually analyzed and made a ruling on whether a party was a joint employer. Those court decisions generally dealt with discrimination under Title VII or analogous state laws or wage and hour violations under the Fair Labor Standards Act or analogous state laws, and only one of them cited Browning-Ferris.

The one case that did cite Browning-Ferris, Nardi v. ALG Worldwide Logistics and Transport Leasing Contract, Inc., 2015 U.S. Dist. LEXIS 123355 (N.D. Ill., September 16, 2015), had nothing to do with unions or the NLRA, but rather was a sex discrimination and retaliation lawsuit under Title VII. The plaintiff, Nardi, worked for ALG Worldwide Logistics (ALG), who, in turn, utilized Transport Leasing/Contract, Inc. (TLC), a professional services organization (PEO), to provide human resources services, including payroll and benefits administration. Noting that to "conclude otherwise in this case would elevate form over substance," the court rejected Nardi's claim that TLC was her joint employer with ALG, noting several key facts: (1) TLC's client companies generally "recruit, interview, and hire their own candidates;" (2) TLC did not review or direct her work; (3) TLC did not set her hours or discipline her; and (4) only ALG management played any role in the warnings that lead to her disputed termination.

With respect to Browning-Ferris, the court in Nardi merely noted that the Board had expanded the circumstances in which the joint employer test from labor law cases can be met. Interestingly, the Nardi court thereafter noted that:

...there appears to be no significant difference between the test articulated in labor law cases and the test that appears in employment discrimination cases: both focus on the extent of control and supervision an entity exerts over the plaintiff, though the economic realities test [from employment discrimination cases] also examines the financial underpinnings of the relationship.

Of the 15 cases, the court in four of the cases found that the third party in question was a joint employer, and, in 10 cases (including Nardi), the court declined to find the third party was a joint employer.

Early franchisor example. The 15th case, was Ochoa, et al. v. McDonalds, et al., 2015 U.S. Dist. LEXIS 129539 (N.D. Cal., September 25, 2015). Ochoa is the first of more than a dozen pending cases where the issue is whether McDonald's franchisors can be liable as joint employers for harm allegedly suffered by employees of McDonald's franchises. Specifically, Ochoa involves California Labor Code claims of a putative class of persons employed by McDonald's franchises in Northern California. Interestingly, franchisor was one of the key contractual relationships about which the minority in Browning-Ferris expressed concern. The court's opinion in Ochoa, however, makes no reference whatsoever to Browning-Ferris.

Plaintiffs in Ochoa named as defendants the owners and operators of the McDonald's franchises at issue, and McDonald's USA, McDonald's Corporation, and McDonald's California. The three McDonald's defendants moved for summary judgment that they were not joint employers of plaintiffs and the putative class members. The Ochoa court applied the joint employer test from the California Supreme Court's decision in Martinez v. Combs, 49 Cal. 4th 35 (2010) and granted in part the McDonald's defendants' summary judgment motion, holding that the McDonald's defendants did not directly employ plaintiffs or the putative class under the Martinez joint employer test. Given the other pending McDonald's joint employer cases, the extent to which the concerns of the minority in Browning-Ferris will be realized in the franchisor context remains to be seen.

Importantly, the McDonald's franchisors did not depart Ochoa completely unscathed. Another issue before court was whether McDonald's as a franchisor could be held liable as a joint employer under an ostensible agency theory. Perhaps in an homage to the upcoming Halloween holiday, Ochoa gave employers, particularly those concerned about the collateral damage from Browning-Ferris, a treat, but it also gave employers with unionized and non-unionized employees an undesired trick when it denied summary dismissal on the issue of whether the McDonald's defendants were liable as a joint employer under an ostensible agency theory of liability.

Employer Considerations

It will take years for the true long-term impact of Browning-Ferris to become apparent. And it is possible, whether through the legal appeals process or the Congressional appropriations process, that the expanded definition ultimately will not take effect. Indeed, still pending is the FY2016 Labor, Health and Human Services and Education and Related Agencies (Labor-HHS) Appropriations Bill approved by the U.S. Senate on June 23, 2015. Included in that $153.2 billion funding bill is a rider stating:

None of the funds made available by this Act may be used to investigate, issue, enforce or litigate any administrative directive, regulation, representation issue or unfair labor practice proceeding or any other administrative complaint, charge, claim or proceeding that would change the interpretation or application of a standard to determine whether entities are "joint employers' in effect as of January 1, 2014.

The rider could, as a practical matter, preclude the NLRB from enforcing the expanded joint employer definition.

If enforced, however, it seems likely that the Browning- Ferris majority's holding that the unexercised right to control may suffice to establish a joint employer relationship will result in an increase in the number of third parties deemed joint employers under the Act. As the minority in Browning-Ferris explained, that expansion would no doubt have monumental effects on the way in which work is performed by employees and how business is conducted among companies. For the time being, businesses, particularly those encompassed in the "virtually unlimited" range of contractual relationships listed above, can work with legal counsel to assess the extent to which they may be at risk to be deemed a joint employer under the new and expanded definition and determine any steps that they may be able to take to mitigate such risk.

To view prior issues of the ELC, click here.


1 Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recyclery, and FPR-II, LLC, d/b/a Leadpoint Business Services, and Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, Petitioner, 2015 NLRB LEXIS 672; 204 L.R.R.M. 1154; 2014-15 NLRB Dec. (CCH) P16,006; 362 NLRB No. 186 ("Browning-Ferris").

UK: Employment Legislation Update – Fall 2015

By Caroline Stakim, MoFo London

This month we highlight the key legislative changes that employers in the UK should be aware are taking place.

From 1 October 2015, national minimum wage hourly rates increase to:

  • £6.70 (from £6.50) for those aged 21 and Over
  • £5.30 (from £5.13) for those aged 18 to 20
  • £3.87 (from £3.79) for those aged 16-17
  • £3.30 (from £2.73) for apprentices aged under 19 or who are in their first year of apprenticeship.

Readers should note that from April 2016, the UK government intends to introduce a higher "national living wage" for workers aged 25 and over, starting at £7.20 per hour (i.e. 50p per hour more than the national minimum wage).

Also from 1 October 2015, the employment tribunals' power to make recommendations (such as a recommendation that the employer should provide equal opportunity training to managers) in successful discrimination cases will be limited to those recommendations that benefit the individual claimant and do not only benefit the wider workforce. In addition, the right of Sikh employees to wear a turban instead of a safety helmet will be extended to almost all places of work (with certain exceptions relating to some military and emergency services roles).

The Modern Slavery Act 2015 is expected to come into force during October 2015 (date yet to be confirmed). The Act will introduce a new obligation for commercial organizations with a global turnover of more than £36 million who carry out any part of their business in the UK. Those organizations will be required to publish an annual statement, accessible on their website, that sets out the steps taken to ensure that no slavery or human trafficking is taking place in the business or supply chains (or, that no steps have been taken, if that is the case).

Statutory guidance for affected organizations on what should be included in the annual statement is also expected to be published around the same time as the new duty taking effect.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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.

Eric A. Tate
Caroline Stakim
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.