In the labor context, when an entity is considered a joint employer with a “direct employer” of employees covered by a collective bargaining agreement, it is viewed as part of a single bargaining unit and may be held liable for violations of the National Labor Relations Act (NLRA). AT&T v. NLRB, 67 F.3d 446, 450–51 (2d Cir. 1995). Accordingly, the standard that is used to determine the existence of a joint employer relationship under the NLRA is of particular importance to those businesses who engage contractors or staffing agencies to supply workers as it has the potential to expand liability for unfair labor practices and collective bargaining obligations that pertain to employees of a separate employer (i.e., the “direct employer”).
Traditionally, establishing joint employment required that the purported joint employer exercise “direct and immediate” control over the other entity’s employees. Under such circumstances, two employers were considered to be “joint employers” only when those two entities exerted direct and significant control over the same employees by sharing authority over their terms and conditions of employment. Those factors relevant to a determination of joint employer status included the right to hire, terminate, discipline, supervise, and direct the employees. The control exercised by the putative joint employer must be direct, immediate, and substantial; it could not be theoretical, occasional, or limited.
In 2015, the National Labor Relations Board (NLRB) upended this longstanding precedent by significantly expanding the standard used for determining joint employer status. In Browning-Ferris Industries of California, Inc., the NLRB rejected the established joint employer test and adopted a much looser standard whereby it considered “indirect control” to be the main factor in determining whether a joint employer relationship existed under the NLRA. In rejecting the “limiting requirements” previously imposed, the NLRB specified:
“We will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. Reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry … Nor will we require that, to be relevant to the joint-employer inquiry, a statutory employer’s control must be exercised directly and immediately. If otherwise sufficient, control exercised indirectly — such as through an intermediary — may establish joint-employer status.”
Accordingly, under Browning-Ferris, joint employment could exist where, for example, an entity exercised only indirect control over the workers in question, or where the entity had the right to control the workers but did not exercise said right.
Not surprisingly, the NLRB’s decision in Browning-Ferris was appealed to the U.S. Court of Appeals for the District of Columbia Circuit, with oral argument held in early March 2017. Given the ramifications for the business community, the significance of the D.C. Circuit’s forthcoming decision cannot be overstated. Unfortunately, in the intervening period, employers must continue to wait for clarity as to which joint employment standard the NLRB will be permitted to use and, consequently, what union-related responsibilities those companies with contractor relationships will be required to share going forward.
On December 14, the NLRB overruled the its 2015 decision in Browning-Ferris and returned to the pre-Browning-Ferris standard that governed joint-employer liability. Accordingly, in all future and pending cases (at least during the present political administration), two or more entities will be deemed joint employers under the NLRA if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.
Glenn A. Duhl is a management-side employment and litigation lawyer at Zangari Cohn Cuthbertson Duhl & Grello P.C. Please visit www.zcclawfirm.com.
The information contained in this article is general in nature and offered for informational purposes only. It is not offered and should not be construed as legal advice.
(image courtesy of blog.hrusa.com)