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The NLRB Redefines The Joint Employer Standard

Earlier this year, the National Labor Relations Board (“NLRB”) issued its decision in Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186 (2015) which provided an overhaul of the NLRB’s longstanding joint employer doctrine. Now, two employers may be considered joint employers, and therefore subject to union organizing and bargaining for the same employees, if there is at least possession of the right to control and the indirect exercise of control by one business over the terms and conditions of employment of another business’ employees. The potential effects of the Browning-Ferris decision are numerous.

Browning-Ferris operated a recycling facility in California. Browning-Ferris had a labor services agreement with Leadpoint, which supplied workers to perform duties at Browning-Ferris’ facility. The Union eventually sought to represent the employees supplied by Leadpoint who worked at Browning-Ferris’ facility. The Board’s Regional Director determined that Browning-Ferris was not a joint employer of Leadpoint’s employees based upon past precedent requiring joint employers to “share or codetermine [] those matters governing the essential terms and conditions of employment.” Id. at 6. Ultimately, the Regional Director’s decision was appealed to the Board.

In its decision, the NLRB “restated” the joint employer standard. Under the new standard, to determine whether two employers share or codetermine those matters governing the essential terms and conditions of employment, the Board will look at whether there is a common-law employment relationship with the employees in question. If so, the Board will determine whether the putative joint employer possesses sufficient control over the same employees. The Board made clear that it no longer requires the actual exercise of authority over terms and conditions of employment—the right of control is enough. Id. at 15-16. Further, the exercise of indirect control, as opposed to direct control, is sufficient to support a joint employer finding. Id. The Board stated “the right to control, in the common-law sense, is probative of joint-employer status, as is the actual exercise of control, whether direct or indirect.” Id. at 16. This new standard requires a factual inquiry into complex business relationships that typically are often not created with labor relations in mind.

Legislation has been referred to a congressional committee that would legislatively overrule the NLRB’s decision in Browning-Ferris. On September 9, 2015 the Protecting Local Business Opportunity Act was referred to a congressional committee. The Act would provide that “two or more employers may be considered joint employers for purposes of [the NLRA] only if each shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.” See S. 2015 and H.R. 3459, available at https://www.govtrack.us/congress/bills/114/s2015.

It seems that under the joint employer standard outlined in Browning-Ferris, two businesses could be tangled up in one another’s unfair labor practices, mandatory bargaining obligations, and/or other duties imposed by the National Labor Relations Act. The Board’s new joint employer standard provides businesses and companies an opportunity to review their contractual agreements to assess the risk of a joint employer finding. As the Board stated, the exercise of indirect control and possession of the right to control is enough to support a joint employer finding, so to the extent these exist in your contracts, you should consider the risks. If you would like additional information or assistance in reviewing your company policies and procedures, please do not hesitate to contact your DeWitt attorney.

About the Author

Jordan Rohlfing is a senior associate at DeWitt LLP. She is an active member of DeWitt’s Litigation, Labor & Employment Relations, and Background Screening practice groups. She is dedicated to providing top-quality legal services for all of her clients. She regularly counsels businesses with respect to issues and claims that arise under Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Wisconsin Fair Employment Act, the Family and Medical Leave Act, the Fair Labor Standard Act, the National Labor Relations Act, and many other federal and state laws related to discrimination, harassment, retaliation, and wage and hour issues, among others.

Contact Jordan by email or phone at (608) 283-5509.

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