Wednesday, January 2, 2019

DC Circuit on the Joint Employer Standard

Just another chapter in the long and unbelievably convoluted evolution of the test for joint employment. The NLRB is currently considering a new rule to formally adopt the pre-Browning Ferris standard. Meanwhile, the D.C. Circuit went ahead and decided Browning-Ferris Indus. v. NLRB on December 28, 2018 without waiting for the NLRB rule (Merry Christmas and a Happy New Year!).

The Court applied the common law test for joint employment, often turning to the Restatement (Second) of Agency. Perhaps most notably, the Court does not seem to give a damn what the NLRB is doing:
Not official use.
[I]t is precisely because Congress has tasked the courts, and not the Board, with defining the common-law scope of “employer” that . . . we resolve this case notwithstanding the pending rulemaking. The policy expertise that the Board brings to bear on applying the National Labor Relations Act to joint employers is bounded by the common-law’s definition of a joint employer . . . . [W]e see no point to waiting for the Board to take the first bite of an apple that is outside of its orchard.
It will be interesting to see what happens to the rulemaking in light of this opinion (of course, we still have the possibility of the D.C. Circuit reconsidering en banc, or even the Supreme Court weighing in).

The Court held that the common law test allows consideration of the putative joint employer's "reserved right to control and its indirect control over" the employees (as opposed to just the actual exercise of direct control).

The Court did tweak the NLRB's earlier decision in the case a little though. The common law test confines consideration of indirect control - it must be indirect control "over the essential terms and conditions of the workers' employment." On remand the Court directed the NLRB to "erect some legal scaffolding" to prevent finding joint employment based on "the common and routine decisions that employers make when hiring third-party contractors and defining the terms of those contracts."

Potential joint employers should review the Court's opinion, but it is probably not the last word. We'll see how the NLRB responds in its rulemaking process, and keep an eye out for appeals (or possibly even circuit splits - but the D.C. Circuit carries a lot of weight in review of administrative decisions).