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The National Labor Relations Board “Joint Employer” Ruling

Introduction

On August 27, 2015, the National Labor Relations Board (NLRB) released a ruling in the Browning-Ferris Industries of California, Inc. case, in which the NLRB revised its standard for determining joint employer status under the National Labor Relations Act (NLRA).[1] The ruling expands the number of entities that can be considered joint employers, and it will have a significant effect on both franchise relationships and temporary staffing arrangements. The NLRB issued a statement noting that 2.87 million of the nation’s workers were employed through temporary agencies in August 2014 and that the previous standard had not kept up with changing times.[2]

In the 3–2 decision, the NLRB determined that Browning-Ferris Industries of California, Inc. (“BFI”) was a joint employer of workers provided by a staffing agency at one of the company’s recycling plants. In finding joint employer status, the NLRB relied on the indirect and direct control that BFI possessed over the essential terms and conditions of employment of employees supplied by the staffing company as well as BFI’s reserved authority to control such terms and conditions.

Overview

Prior to Browning-Ferris, the NLRB’s longstanding analysis for joint employer status turned on whether the potential joint employer retained sufficient control over the terms and conditions of employment of the employees and “directly and immediately” exercised such control. In Browning-Ferris, however, the NLRB rejected this standard and instead instituted a broader standard that makes it easier to find that joint employer status exists.

The NLRB will continue to apply the joint employer test: (1) whether both entities are employers under common law; and (2) whether both entities share control over or codetermine matters governing the essential terms and conditions of employment. However, in evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB will now consider—among other factors—whether an employer has exercised control over essential terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so. Accordingly, the NLRB will no longer require that joint employers actually exercise the authority to control terms and conditions of employment—the potential to exercise such control may be enough. Additionally, indirect control may establish joint employer status, and the NLRB will not require that an employer’s control be exercised directly and immediately. The NLRB gave several examples of probative “essential terms” of employment, including wages and hours, dictating the number of workers to be supplied, controlling scheduling, seniority, and overtime, and assigning work and determining the manner and method of performance.

The NLRB justified the expansion of the joint employer standard by citing its “responsibility to adapt the [NLRA] to the changing patterns of industrial life.”[3] The NLRB explained that the previous standard was inconsistent with the workplace arrangements in today’s economy and the NLRA’s goal of encouraging collective bargaining.

Next Steps

This ruling greatly expands the scope and circumstances under which a company using temporary staffing agencies can be found liable as joint employers. Employers that utilize staffing agencies should review the contracts that they have with their temporary staffing companies to identify areas where the NLRB may find that they have retained control over essential terms and conditions of employment. In addition, employers should evaluate how they communicate requirements, qualifications, and standards to third-party staffing agencies to assess the likelihood that the NLRB would find a joint employer relationship.

Brennan, Manna & Diamond, LLC’s Labor & Employment group advises its clients on various NLRA issues. BMD can assist you in reviewing your temporary staffing agreement and procedures in light of the new ruling.

Should you have any questions regarding the ruling, please feel free to contact John N. Childs, Esq at (330) 253-5060.

[1] Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), available at http://apps.nlrb.gov/link/document.aspx/09031d4581d99106.

[2] NLRB Office of Public Affairs, Board Issues Decision in Browning-Ferris Industries, National Labor Relations Board (Aug. 27, 2015), https://www.nlrb.gov/news-outreach/news-story/board-issues-decision-browning-ferris-industries.

[3] Browning-Ferris, at 11.