Friday, August 28, 2015

NLRB Announces "Refined" Joint Employer Standard

It's not every day that you see #NLRB as one of the top trending topics on Twitter; but, yesterday was just such a day. Why? The NLRB issued a press release, and a corresponding opinion in Browning-Ferris Indus., announcing a "refined" standard for analyzing joint employment.

What are "joint employers?" Sometimes people are technically employed by one employer... but their work appears to be closely related to another entity. For example, when you walk into a McDonald's, it is most likely owned and operated by someone (franchisee) other than the big, national McDonald's corporation (franchisor) under a franchise agreement. Technically, the cashier and cooks are employed by the franchisee . . . but, some people argue that they are also McDonald's employees because of the level of control that the national corporatio
Not official use.
n exerts over the franchises.

Why does it matter? Well, under the NLRA, the workers can collectively bargain with their employer - that would include a joint employer. Workers can also assert liability against their joint employers. Simply put (returning to the McDonald's example), the workers would derive some benefits from being able to bargain with, and assert liability against, the deep pockets of a national chain instead of just a local franchisee.

Yesterday's NLRB opinion dealt with a recycling facility owned and operated by BFI, but staffed under a labor agreement with Leadpoint. The agreement stated that Leadpoint was the sole employer - but the NLRB felt differently. It concluded that:
We find BFI’s role in sharing and codetermining the terms and conditions of employment establishes that it is a joint employer with Leadpoint.
But, the big news is that the NLRB redefined the standard for determining joint employment:
The Board may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating the allocation and exercise of control in the workplace, we will consider the various ways in which joint employers may “share” control over terms and conditions of employment or “codetermine” them, as the Board and the courts have done in the past.
[Editorial note: So far, this sounds uncontroversial and pretty much like the old test. And then . . . . ]
But we will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but must also exercise that authority, and do so directly, immediately, and not in a “limited and routine” manner. Accordingly, we overrule Laerco, TLI, A&M Property, and Airborne Express, supra, and other Board decisions, to the extent that they are inconsistent with our decision today. 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.
The opinion (and dissent) are long and complex, so it's hard to really pinpoint the exact controversy. But I think this passage from the dissent gives you a good idea of the flavor of the arguments:
[T]he majority abandons a longstanding test that provided certainty and predictability, and replaces it with an ambiguous standard that will impose unprecedented bargaining obligations on multiple entities in a wide variety of business relationships, even if this is based solely on a never-exercised “right” to exercise “indirect” control over what a Board majority may later characterize as “essential” employment terms. This new test leaves employees, unions, and employers in a position where there can be no certainty or predictability regarding the identity of the “employer.”
We'll see what impact this has on potential joint employers in the future. Certainly, the big franchisors can't be happy about it.