NLRB Turns To Rulemaking To Reverse Joint Employer Standard

By Swerdlow Florence Sanchez Swerdlow & Wimmer

October 12, 2018

The National Labor Relations Board (the “Board”) has issued a proposed regulation to re-establish the traditional test for determining whether two employers are considered “joint employers” under the National Labor Relations Act (“NLRA”). Under the proposed rule, an employer would be considered a joint employer of a separate employer’s employees “only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction.”

The proposed rule would reverse the Board’s controversial 2015 decision, Browning-Ferris Industries of California, Inc. (“BFI”), which greatly expanded the definition of a joint employer and imposed liability in situations where a business merely possesses, but does not necessarily exercise, potential or indirect control over the employees in question. The BFI decision drew scrutiny from the employer community because joint-employer status can pose serious challenges to a business. For example, a joint employer may be liable for unfair labor practices committed by the other joint employer and may be subject to labor organizing, picketing and bargaining with a union representing jointly employed workers.

The proposed regulation would re-establish that a putative joint employer “must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.” Under the Board’s proposed rule, reserved authority and indirect control would no longer be sufficient to establish a joint-employer relationship. Instead, the Board is utilizing the rule making process to “clarify what constitutes the actual exercise of substantial direct and immediate control” and, thereby, significantly narrow the potential for finding a joint-employer relationship.

In its press release, the Board noted that the proposed rule “reflects the Board majority’s initial view, subject to potential revision in response to public comments, that the National Labor Relations Act’s intent is best supported by a joint-employer doctrine that does not draw third parties, who have not played an active role in deciding wages, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another employer’s employees.”

If you wish to support the Board’s proposed regulation, comments may be submitted by November 13, 2018. And, of course, please contact your SFSS&W attorney if you have any questions about whether your business faces joint-employer liability or any other labor and employment law matter.