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Here we go again: NLRB Announces Proposed Rule to Restore Traditional Joint-Employer Standard

On September 14, 2018, a three-member majority of the National Labor Relations Board (“NLRB” or “Board”) comprised of Members William Emanuel, John Ring, and Marvin Kaplan published a proposed rule in the Federal Register that would restore the Board’s joint-employer standard as it existed prior to the 2015 Browning-Ferris decision

Pursuant to the proposed regulation:

“An employer may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision and direction.  More specifically, to be deemed a joint employer under the proposed regulation, an employer must possess and actually exercise substantial direct and immediate control over the essential terms and conditions of employment of another employer’s employees in a manner that is not limited and routine.” 

 The rule’s proponents contend the proposed rule would return the joint-employer analysis to the Board’s traditional jurisprudence, which, per the majority, was “significantly relaxed” by the Board’s decision in Browning-Ferris.  Specifically, the Browning-Ferris decision held that the power to exercise control over a workforce, rather than whether such power is actually exercised, was the appropriate lens for assessing joint employment.  The new proposed rule, in contrast, seeks to restore the traditional standard, which found joint-employment when the employer actually exercised direct and immediate control over the other employer’s employees. 

Employers may recall that this is not the first time that President Trump’s Board has sought to restore its’ traditional joint-employment analysis.  In December 2017, the Board overruled Browning-Ferris in a decision styled Hy-Brand Industrial.  However, Hy-Brand Industrial was vacated in February 2018 when the Board’s Designated Agency Ethics Official determined that Member Emanuel should not have participated in the decision. 

In a sharp dissent, Member Lauren McFerran took the Board’s majority to task, arguing:

“[T]here is no good reason to revisit Browning-Ferris, much less to propose replacing its joint-employer standard with a test that fails the threshold of consistency with the common law and that defies the stated goal of the National Labor Relations Act: ‘encouraging the practice and procedure of collective bargaining.’” 

Interested parties now have 60 days to comment on the proposed rule. 

For employers that make use of another entity’s employees, or otherwise have close relationships – such as franchisors and franchisees or contractors and subcontractors -- this proposed rule comes as welcome news.  Should the Board adopt the proposed rule at the end of the rulemaking process, employers will be provided greater certainty when entering into relationship with other entities. 

That said, labor watchers expect the road to the final rule to be bumpy.  Unions and their allies have already signaled they will challenge the rule through the comment process and – most likely – in the courts. 

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Cary Burke, Polsinelli PC, Atlanta, Workplace Regulation Lawyer, Employment Compliance Attorney
Associate

Cary Burke takes pride in bringing an assertive and strategic brand of representation to clients as a member of Polsinelli's employment litigation team. He partners with employers to address employment-related problems ranging from the day-to-day questions to workplace investigations employers may face in an increasingly regulated workplace. Cary's practice focuses on assisting employers in litigating claims involving trade secrets, restrictive covenants, and tortious interference. Cary also has litigated issues arising under the Civil Rights Statutes and the National...

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