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Browning-Ferris Industries—Impact of NLRB’s Joint-Employer Status Decision

On August 27, 2015, in a 3-2 decision involving Browning-Ferris Industries, the National Labor Relations Board (NLRB) refined its standard for determining joint-employer status. Although the decisions specifically dealt with standards in union organizing campaigns, the breath and ambiguity of the language of the decision raises concerns for outsourcing and other traditional services contracts.

  • Changed Standards of “Relevant Control”. Under the new joint-employer standard, the NLRB will consider the potential control or indirect control of “the manner and means of work performance” in determining whether both the customer and the contractor are joint employers. Actual, direct control of the employment terms for a contractor’s employees is no longer necessary for a joint employer determination.

  • A Joint Employer Finding Matters Even if the Contractor Is Not Unionized. Even if the third-party contractor with whom a customer is determined to be a joint employer is not unionized and has no significant risk of being unionized, a joint employer determination may nevertheless expose the customer to significant risks of liability for actions by the contractor, as the National Labor Relations Act (NLRA) also covers the majority of employees at non-union companies.

  • Properly Manage the Risks of a Joint Employer Determination. Given the expanded risk of joint employer status, customers should review the terms of existing and future agreements with their third-party suppliers to minimize the risk of triggering joint employer status and to provide adequate indemnification protections. Based on the indirect control inherent in many services agreements, customers should also take steps to ensure that their suppliers are well managed and to identify and remove problematic suppliers before poor management leads to NLRA liability or organizing campa

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About this Author

Harry I. Johnson III, Morgan Lewis, labor and employment attorney
Partner

Harry I. Johnson, III serves clients as a management-side defense lawyer, with more than 20 years of experience in traditional labor matters before the National Labor Relations Board (NLRB) and federal courts. Harry practices across the entire traditional union/labor field, including in NLRB unfair labor practice and representation proceedings, union representation campaigns, union corporate campaigns, labor arbitrations, collective bargaining, labor-management relations, labor-related advice for mergers and acquisitions, and federal and state labor injunction cases,...

310.255.9005
Peter Watt-Morse, Morgan Lewis, Intellectual property lawyer
Partner

Peter M. Watt-Morse, one of the founding partners of the firm’s Pittsburgh office, has worked on all forms of commercial and technology transactions for more than 30 years. Peter works on business and intellectual property (IP) matters for a broad range of clients, including software, hardware, networking, and other technology clients, pharmaceutical companies, healthcare providers and payors, and other clients in the life science industry. He also represents banks, investment advisers, and other financial services institutions.

412-560-3320
Glen Rectenwald, Morgan Lewis, Technology Attorney
Associate

Glen W. Rectenwald focuses his practice on technology, outsourcing, and commercial transactions. He regularly assists a broad range of clients with development, licensing, and distribution agreements; strategic alliances and joint ventures; manufacturing and supply agreements; complex outsourcing and strategic commercial transactions; and general commercial matters. Glen’s experience also includes mergers and acquisitions, private equity, venture capital, and general corporate matters.

412-560-7413