Quite a bit recently and something for all employers to take note of ...
The National Labor Relations Board (NLRB) has a new standard for determining joint-employer status as a result of a controversial 3-2 decision.
In this decision involving Browning-Ferris Industries of California, the Board created a new "indirect control" standard for determining joint employment under the National Labor Relations Act (NLRA). The Board determined that if an entity affects the means and manner—either directly or indirectly—of the work terms and conditions of another entity's employees, it will be considered a joint employer with the other entity.
Who is the NLRB? -- By way of background, the NLRB is an independent agency of the United States government charged with conducting elections for labor union representation and with investigating and remedying unfair labor practices.
What is the NLRA? -- Congress enacted the National Labor Relations Act ("NLRA") in 1935 to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.
Why do employers want to avoid joint-employer status? -- If two different businesses either hire or control the same employee, they may be joint employers. Joint employment is risky because each joint employer is responsible for events even when they do not have control. The “employers” of a worker make it more difficult it is for each joint employer to meet its responsibilities and limit its liability.
What is the new standard? -- This new standard is a big departure from the prior standard, in which joint employment was found only if the control exercised by the putative joint employer was actual, direct and substantial. After returning from the August congressional recess, lawmakers were quick to introduce a bill that would negate the NLRB’S decision in Browning-Ferris.
Is there legislation opposing this ruling? -- Yes, the Protecting Local Business Opportunity Act (H.R. 3459, S. 2015) would amend the NLRA to memorialize the prior long-standing joint employer standard. The provisions of the bill are brief and to the point. The measure would amend Section 2(2) of the NLRA by adding the following language: “Notwithstanding any other provision of this Act, two or more employers may be considered joint employers for purposes of this Act only if each shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.”
What does this mean for me? This decision answered whether a business had a duty to recognize and bargain with its staffing service's employees. However, the decision could also apply in other contexts falling under the NLRB's jurisdiction.
The new standard could create new obligations and liabilities under other business models as well franchisor-franchisee relationships, venture capital companies, parent-subsidiary relationships, and independent contractors. The indirect control standard may be used to weaken the position of companies such as Federal Express and Uber that treat their drivers as independent contractors. The ruling could spill over into other employment law arenas, including OSHA and Title VII (anti-discrimination statute).
TAKE AWAY TIP: This case doesn’t decide whether any of these other industries are joint employers. Every case has to be decided on its own facts. Continued vigilance in avoiding joint-employer situations is key: clear agreements, no supervision of work if possible, no employment benefits, no training, no authority to hire, fire, promote. However, the NLRB is sending a signal: denial of joint-employer status is harder to demonstrate. The question is whether that signal is widely received by others.
