NLRB Issues New Ruling on Joint Employment

Miller & Martin PLLC Alerts | August 28, 2015

by Bill Trumpeter

In a 3-2 decision involving Browning-Ferris Industries of California (BFI), the National Labor Relations Board (NLRB) refined its standard for determining joint-employer status.

According to the NLRB majority, the revised standard is designed "to better effectuate the purposes of the Act in the current economic landscape." The Board noted that there were more than 2.87 million workers employed through temporary agencies in August 2014. The Board held that its previous joint-employer standard has failed to keep pace with changes in the workplace and economic circumstances.

In the decision, the Board found 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 -- among other factors -- 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 its decision, the Board found that BFI was a joint employer with Leadpoint, the staffing company that supplied employees to BFI to perform various work functions for BFI, including cleaning and sorting recycled products. In finding that BFI was a joint employer with Leadpoint, the Board relied on "indirect and direct control that BFI possessed over essential terms and conditions of employment of the employees supplied by Leadpoint as well as BFI's reserved authority to control such terms and conditions."

The dissenting opinion illustrates the significance of this decision. "Today, in the most sweeping of recent major decisions, the Board majority rewrites the decades-old test for determining who the 'employer' is. More specifically, the majority redefines and expands the test that makes two separate and independent entities a 'joint employer' of certain employees. This change will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing."

Under this new decision, employers whose business model uses temporary employees from a labor provider may be facing a potential minefield of legal issues. We also are awaiting further developments from the Board concerning franchisees and franchisors as joint employers.

As always, should you have questions regarding this or other NLRB developments, please feel free to contact Bill Trumpeter or any other member of our Labor & Employment Law Practice Group.

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