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NLRB Joint Employer Standard Still in Flux

The definition of “joint employer” under the National Labor Relations Act (“NLRA”) has been quite a rollercoaster for several years now.  Since 2015, when the National Labor Relations Board (“NLRB” or “Board”) departed from precedent established over 30 years ago in Browning-Ferris, there has been much controversy on when two unrelated business entities share sufficient control over a group of employees such that they may be deemed “joint employers” and held jointly liable to employees for violations under the NLRA.  Even with a Board-proposed rule on the joint employer standard pending, a recent decision of the United States Court of Appeals for the District of Columbia shows the joint employer distinction is still far from settled.

A Lot of Back-and-Forth

The 2015 Browning-Ferris decision significantly broadened the circumstances under which entities could be held joint employers under the NLRA. The definition of joint employer was expanded to include entities which possess only indirect control over terms and conditions of employment, and those that reserve, but might not actually exercise, the right to control the terms and conditions of employment. 

With the onset of the Trump Administration in 2017, the Board re-narrowed the joint employer standard to limit a finding of joint employer status to those entities with significant direct control over employees.  That re-narrowed standard, however, didn’t last long.  That decision, Hy-Brand Industrial Contractors, was vacated only two and a half months after it was issued due to a potential conflict of interest by one of the Board Members involved, William Emanuel. The Browning-Ferris standard was thus resurrected.

In September 2018, the Board announced its plan to use the formal rule-making process to adopt a new definition of joint employer.  Under the proposed rule, in order to be found a joint employer with another, “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.”  As a result of several extensions to the comment period, public comments on the proposed rule may be submitted on or before January 14, 2019.

Still Not Settled

Employer Browning-Ferris petitioned the United States Court of Appeals for the District of Columbia to review the 2015 decision that started all this. Late last month, the DC Circuit issued its decision.  For the most part, the court agreed with the standard set forth in Browning-Ferris, although it expressly declined to address whether “reserved right to control, divorced from any actual exercise of that authority, could alone establish a joint employer relationship,” since there was already sufficient evidence of actual exercised control.

The court held the Board did not err when it concluded that authorized but reserved control, and/or indirect control over the essential terms and conditions of employees’ employment, are appropriate factors to consider in determining joint employment. The court remanded the case back to the Board, however, to define the parameters of “indirect control” and apply only those facts that fall within those parameters, finding the Board did not properly confine its factual analysis to the “essential terms and conditions of employment” and instead considered evidence of routine company-to-company contract components.

Considering the years of back and forth on this subject and the DC Circuit’s recent decision which appears to be at odds with the Board’s proposed rule, this issue is still anything but settled.  Since the Board is now tasked with reviewing its 2015 decision in Browning-Ferris, it will be interesting to see if they revise it to be consistent with the proposed rule or keep the standard as is.  We will continue to monitor and provide updates on the proposed rule and any new developments in Browning-Ferris.  Stay tuned.

Brody and Associates regularly advises management on complying with state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.