NLRB Hands Down Groundbreaking Joint Employer Ruling
Author: David B. Weisenfeld, XpertHR Legal Editor
August 31, 2015
The National Labor Relations Board (NLRB) has broadened the definition of "joint employer" in a landmark ruling that could make it easier for unions to negotiate on behalf of workers at companies that rely on contractors and franchisees.
With an increasing number of workers employed through temporary agencies and other contractors, the NLRB held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances.
The 3-2 ruling comes in a case involving Browning-Ferris Industries (BFI) of California. A contractor aided in staffing BFI's recycling center with sorters, screen cleaners and other workers. Reversing a decision by an NLRB Regional Director, the NLRB found that BFI and the contractor are joint employers.
Despite the claim of BFI managers that they were never involved in any disciplinary decisions involving these workers, the NLRB majority found that BFI exercised a degree of control over the sorters, screen cleaners and other workers at issue, even though it did not participate in the day-to-day hiring and firing process. The NLRB noted that BFI still retained the right to reject any worker that the contractor referred to its facility and played a role in determining their wages.
The NLRB explained that two or more entities are joint employers of a single workforce if:
- They are both employers within the meaning of common law; and
- They share or codetermine matters governing the essential terms and conditions of employment.
In evaluating whether an employer qualifies as a joint employer, the NLRB said it will consider whether an employer has exercised control indirectly (e.g., through a third party), or whether it has reserved the right to do so.
The NLRB said in its opinion, "It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers while maintaining control of the workplace. Such an approach has no basis in the [National Labor Relations] Act or in federal labor policy."
Philadelphia management-side labor attorney Jonathan Segal lamented the ruling. He said, "It creates increased uncertainty for employers and a lot of ammunition for union organizing." Segal called the case an example of "the NLRB's continued push from adjudication to advocacy."
The two dissenting NLRB members expressed a similar viewpoint. They called the decision "sweeping," and also said its expansion of the joint-employer definition will subject countless entities to unprecedented new joint-bargaining obligations.
The US Chamber of Commerce had filed a brief in the case and spoke out against the ruling. Among other things, it warned that this new standard could allow a fast-food franchisee's employees to have the right to negotiate not just with a franchisee, but with the corporate headquarters as well.