Expansion of the Joint Employer-NLRB Browning-Ferris Decision

On Behalf of | Sep 9, 2015 | Employment Law -- Employer |

At the end of August, the National Labor Relations Board (NLRB) handed down a decision, departing dramatically from past precedent, ruling that companies may be held liable for labor violations conducted by their contractors and subject to joint collective bargaining agreements. This decision held that waste management company, Browning-Ferris Industries, who hired LeadPoint Staffing, to supply employees to a one of its recycling centers, is a joint employer and required to participate in collective bargaining along with LeadPoint.

Before the Browning-Ferris decision, an employer was a joint employer for purposes of labor law liability, only where, both companies possessed the ability to control or co-determine essential terms and conditions of employment. Essential terms of employment were hiring, firing, and supervising employees. Furthermore, an entity had to maintain actual and direct terms of these conditions. Reserving some level of control through an agreement or contract was insufficient to render an entity a joint employer. The Browning-Ferris decision expanded who may be a joint employer, stating:

“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.”

The control of an entity no longer needs to be direct or immediate. The NLRB also broadened essential terms and conditions of employment to include: determining the number of workers to be supplied, setting work hours, controlling seniority, approving overtime, assigning work and determining the manner and method of work performance.

Using the newly expanded criteria, the NLRB found that Browning-Ferris was a joint employer with their staffing company, LeadPoint. Browning-Ferris gave LeadPoint supervisors directives concerning employee performance, set conditions for hiring, retained the authority to discontinue the use of LeadPoint employees, determine when overtime was worked and prohibited LeadPoint from paying their employees more than Browning-Ferris paid its own employees who performed similar work.

The NLRB reports that the revised standard is designed “to better effectuate the purposes of the law in the current economic landscape” and the previous joint employer standard “has failed to keep pace with changes in the workplace and economic circumstances.”[1] This decision expands far beyond the practices of Browning-Ferris and LeadPoint. Currently, over 2.87 million American workers are employed through staffing and temporary agencies.

Moreover, this decision may affect, insurance companies that require employers to take certain actions with employees in order to comply with

policy requirements for safety, security and health, franchisors, banks whose financing terms may require certain performance measurements and small businesses who dictate times, manner, and some methods of performance of their contractors. Critics of the decision lament that it pits corporate parents against their franchisees in collective bargaining.[2] Proponents state that the decision is a step toward mending the “increasingly “fissured” economy, in which whole industries have been built on business models that offer workers few of the protections of a traditional employer relationship.”[3]

Opinions aside, the Browning-Ferris decision will prompt employers to reevaluate their contracts to determine who has control over the terms and conditions of employment. The risk of being found a joint employer must be weighed against the benefits of retaining control of operation and personnel decisions.

[1] https://www.nlrb.gov/news-outreach/news-story/board-issues-decision-browning-ferris-industries

[2] http://www.wsj.com/articles/nlrbs-joint-employer-attack-1440805826

[3] http://www.washingtonpost.com/news/wonkblog/wp/2015/08/27/labor-board-moves-to-make-businesses-accountable-for-their-subcontractors/