October 23, 2021

Volume XI, Number 296

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October 22, 2021

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October 21, 2021

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NLRB Issues Controversial Decision Changing the Standard for Joint Employer Status

On August 27, 2015, in a 3–2 decision, the National Labor Relations Board (the Board) determined that Browning-Ferris Industries of California was a joint employer of workers hired by a contractor to staff one of Browning-Ferris’s recycling plants. Browning-Ferris contracted with Leadpoint, a staffing agency, to supply workers to perform cleaning and sorting tasks at its plant. The contract could be terminated by either party within 30 days, and stated that Leadpoint was the sole employer and should not assign workers to Browning-Ferris for more than six months. The two companies kept separate supervisors and lead workers at the facility and they maintained separate human resources departments.

The Union’s Case

The Teamsters, the union that represents Browning-Ferris’s unionized employees, wanted to include the Leadpoint employees in their bargaining unit, and argued that Browning-Ferris was a joint employer of these employees. The union argued that Browning-Ferris controlled the employees’ wages because Leadpoint agreed not to exceed Browning-Ferris’s own wages, and that Browning-Ferris had a role in the discipline of some Leadpoint employees. The union further argued that Browning-Ferris controlled the essential terms and conditions of employment, including qualifications, work hours, breaks, rules and the speed of the lines.

NLRB’s Rationale

Since the 1980s, the Board has followed a definition that requires joint employers to exercise “direct and immediate” control over the terms and conditions of employment. Finding that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances, the Board stated that the revised standard will “better effectuate the purposes of the Act in the current economic landscape.”

Under the new standard, the Board held that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so. In other words, the new test is whether a company has the potential to exercise control over wages and working conditions, regardless of whether that control is actually used.

Overarching Implications

The Board held that Browning-Ferris exercised enough actual and potential control over employees inside the plant to be considered a joint employer. The decision could have far-reaching implications for any company that uses contractors, including large franchisors that may now be required to bargain with the unionized employees of their franchisees if they have the potential to control the wages or working conditions of the employees. While much discussion has centered around the potential impact the decision may have against franchisors, other businesses, including staffing agencies, may face the same challenges being directed against the franchise structure. This trend has the potential to radically alter corporate liability significantly beyond the traditional employer-employee relationship.

© 2021 Wilson ElserNational Law Review, Volume V, Number 240
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About this Author

Ricki E. Roer, Wilson Elser, Collective Bargaining Lawyer, Labor Disputes Attorney
Partner

Ricki Roer is the chair of Wilson Elser’s Employment & Labor litigation practice. She has litigated thousands of cases in state and federal courts at the trial and appellate levels. Her practice focuses on all aspects of labor and employment law relating to contract and collective bargaining negotiations and disputes; labor arbitrations, grievances and NLRB proceedings; and all aspects of employment transactions. Ricki represents multinational corporations, domestic companies, and non-profit organizations from a wide spectrum of industries. A recognized authority in...

212.915.5375
Yoora Pak, Wilson Elser, Employment related Litigation Lawyer, Worker Disputes Attorney,
Partner

Yoora Pak has extensive experience handling complex employment-related litigation matters. In addition to her litigation practice, Yoora provides counseling to human resources staff and in-house counsel of diverse companies on various employment matters. Prior to her private practice, Yoora worked at the U.S. Department of Labor as a trial and appellate attorney, where she handled matters arising under the various statutes enforced by the DOL.

Yoora also has extensive experience with fair housing litigation and counseling matters. She has...

703.852.7861
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