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On August 27, 2015, the National Labor Relations Board (“NLRB”) broadened the joint-employer standard under the National Labor Relations Act (“NLRA”) in Browning-Ferris Industries of California d/b/a BFI Newby Island Recyclery, Case 32–RC–109684.  This is a significant decision because it modifies long-standing precedent.  Generally, two entities are joint employers if (1) they are both “employers” within the meaning of the common law and (2) they share or codetermine those matters governing the essential terms and conditions of employment.  Previously, the NLRB had held that the second factor is met if the employer has “direct and immediate” control of the employees.  However, under the NLRB’s new interpretation in Browning-Ferris, the second factor now can be established by the simple “right to control” possessed by an entity or by its “indirect control” of employment matters.  

In the Browning-Ferris case, BFI used a staffing agency.  The agency was highly involved in the day-to-day affairs of BFI’s employment matters; it was responsible for hiring, paying, offering pay increases to, supervising, disciplining, and firing its temporary workers.  But despite the agency’s apparently singular control of the terms and conditions of those workers’ employment, the NLRB found that BFI was a joint employer.  The NLRB’s decision was based in part on the contract between the parties, which reserved BFI’s right to participate in many employment decisions, even though the NLRB acknowledged that BFI did not in fact exercise such powers.  This “right to control” the temporary workforce, along with BFI’s “indirect control” over temporary workers by its control of the facility itself and of the logistics of the recycling line, was enough to create a joint-employer relationship under the NLRB’s restated test.  The NLRB’s stated intent of the new interpretation is to better effectuate the purposes of the NLRA, by accounting for the fact that over 2.87 million American workers are now employed through temporary agencies and are thereby subject to somewhat unique employment relationships.

This decision may impact your business to the extent that it is subject to the NLRA and its contracts, or otherwise works with, temporary staffing agencies, or other contractors.  This expansion of the joint-employer standard creates a greater risk that an employer will be found to be a joint employer and therefore could be subject to union organizing activities by, and possible collective bargaining obligations with, employees of such agencies or contractors.  Therefore, these arrangements, including written contracts, should be carefully analyzed and structured to avoid joint employer status.

The foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation and should not be relied on as such.  Please contact one of our labor and employment lawyers if you have any questions.

This update was prepared by Charles S. Elbert, D. Leo Human, and Erin M. Leach.