August 18, 2019

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NLRB Creates New Joint Employer Standard Impacting all Employers

Continuing its pro-union and pro-employee agenda, the National Labor Relations Board issued its long-awaited and closely watched decision in Browning-Ferris Industries of California, Inc. on August 27, 2015. By reaching this decision, the NLRB overruled its prior precedent governing the joint employer standard and made it easier for unions seeking to organize employees of a staffing agency or franchise. The decision requires the corporation using the staffing agency or franchise relationship to bargain with the union over the terms and conditions of employment of the contingent or franchise employees.

The NLRB held its prior joint employer standard was "increasingly out of step with changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships." Changing the standard to account for this change will require separate legal entities to now jointly bargain and be held jointly liable if the other commits unfair labor practices regarding the employees and/or collective bargaining negotiations.

Under the new standard, the Board may find 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." In evaluating this standard, the common law concept of control is used. As in the past, the Board will consider the various ways in which joint employers share control of the terms and conditions of employment, including assigning work and supervision, setting wages and hours, scheduling, hiring, firing, and disciplining, and determining the manner and method of work.

The NLRB will no longer assess whether a putative employer possesses authority to control the terms and conditions of employment and exercises that authority. Nor will the Board require that an employer’s control is exercised "directly and immediately." Rather, the Board found that reserved control, even if not exercised, is clearly relevant to joint employment status, and that control exercised indirectly through an intermediary, if sufficient, can establish joint employer status. The Board emphasized it has modified the legal landscape of the National Labor Relations Act, and no other federal statute. It found that this decision will "best serve the Federal policy of encouraging the practice and procedure of collective bargaining."

Employers in today’s complex economy must ensure their methods and practices comply with NLRB precedent to avoid unintended joint employer status. This decision may have sweeping effects on employers, including in the franchisor-franchisee context, regarding collective bargaining rights vis-à-vis employees and all “joint employers,” whether intended or not under the parties’ agreements and working relationships.

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Darren Sharp, Litigation Attorney, Armstrong Teasdale Law Firm
Partner

Darren Sharp co-chairs the firm’s Franchise, Distribution and Antitrust practice group. He has successfully tried jury trials to verdict in state and federal courts and arbitrations involving business and employment disputes. His experience extends to land use law, especially involving eminent domain, constitutional issues, zoning, and obtaining land use approvals. Because of his achievements, Darren is recognized as a Missouri/Kansas Super Lawyer® and received an “AV-Preeminent” peer review rating from Martindale-Hubbell.

For medium-sized to large corporations, Darren litigates...

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David A. Jermann II, Armstrong Teasdale, Franchise Attorney, Litigation Lawyer
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David Jermann is an accomplished litigator focusing on complex business litigation specifically involving franchise disputes. He thoroughly understands the high stakes involved in these matters and provides strategic and creative resolutions.

Before trial and appellate courts throughout the country, David counsels franchisors—most often in the hotel and real estate arena—in a wide variety of issues arising under franchise agreements and state franchise statutes. He has guided domestic and international franchisors in high profile litigation involving breaches of franchise and distribution agreements; franchise terminations, transfers and renewals; violations of franchise disclosure, relationship and business opportunity laws; unfair competition claims; trademark, trade dress and trade secret claims; violation of non-compete and nonsolicitation covenants; and real estate construction and financing conflicts.

David’s experience extends to the representation of both employers and employees in non-compete disputes in Missouri, Kansas, Texas and Virginia. He also defends brokers and brokerage firms in NASD/FINRA arbitrations and consults on regulatory matters pending before the Missouri and Kansas Securities Commissions. 

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Robert A Kaiser, Employment, Labor, Attorney, Armstrong Teasdale, Law firm
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Bob Kaiser is a member of the Employment and Labor practice group representing emerging and mature businesses in labor and personnel-related disputes. Because employment and labor laws and regulations continue to evolve, he deftly guides management in creating “fences” and boundaries to assess risks and decrease litigation.

A portion of Bob’s practice includes traditional labor law, a focus he has had for more than 25 years. For small- to mid-sized organizations, he handles labor union relations such as union avoidance, collective bargaining, elections, strikes, picketing and other...

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Daniel K. O'Toole, Litigation Attorney, Armstrong Teasdale Law Firm
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Dan O’Toole, a respected leader and trial strategist, heads Armstrong Teasdale’s Litigation practice group and is a key member of the firm’s executive and management committees.

In his practice, Dan defends employers against a broad range of complaints and threats of legal action involving workplace situations. Because of his background and achievements in employment and labor law, Dan has been recognized repeatedly by Chambers USA, The Best Lawyers in America, Super Lawyers and for the last several years was included as one of the “Top 50”...

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