Celebrated NLRB ‘Joint Employer’ Decision May Soon be Overturned

By: Briana Longo

Recently, the National Labor Relations Board (‘NLRB’) redefined what it means to be a “joint employer” when it comes to collective bargaining. In the case of Browning-Ferris Industries of California Inc. and Sanitary Truck Drivers and Helpers Local 250, the NLRB adopted a new test for determining joint employer status, replacing the standard that has been in place since 1982.[1] For the past thirty-three years, federal labor policies held that two separate employers are “joint employers” if both employers have direct and immediate control over the employment terms and working conditions.[2] The Browning-Ferris test states “[t]wo or more entities can be deemed joint employers of a single workforce if they are both employers within the meaning of common law, and they share or co-determine matters governing the essential terms and conditions of employment”[3] The NLRB will look at all factors in determining whether an employer exercises “sufficient control over the work of the employees to qualify as a joint employer”, including whether the employer has exercised “control indirectly—such as through a intermediary”.[4] This is drastically different from the old standard, which required “direct, immediate control over workers.”[5]

If a party can meet this standard under the new test, then they are allowed to collectively bargain as employees.[6] When applying the new standard, the “board may find that two or more statutory employers are joint employers of the same statutory employees if they ‘share or codetermine those matters governing the essential terms and conditions of employment.”[7] This new standard will force employers to have to jointly negotiate working conditions with unions and share liability for labor law violations. Further, it allows a union “to negotiate with a staffing buyer over both traditionally hired and staffing firm workers based on the client employer having indirect control over the workers.”[8] Additionally, the new standard will be applied retroactively.[9]

The new ruling was quickly celebrated, as it opens a lot of doors for workers employed by franchisees, subcontractors and temporary staffing agencies.[10] However, soon after this case decision came down, lawmakers were quick to try to overturn the NLRB’s decision regarding the terms ‘indirect control’. On September 9, 2015 an act was introduced to revert the standard back to a similar version of its original enactment in 1982.[11]

The Protecting Local Business Opportunity Act (‘the Act’) is seeking to amend Section 2(2) of the NLRA by adding the following to the end: “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.”[12] The bill changes the indirect control standard back to actual, direct and immediate control.

If two separate employers were found to be “joint employers” under the standard the Bill is proposing, which also happens to be a role back of the original enactment that had been in place for decades, they are to have direct and immediate control over employees.[13] Employers are to have control over tasks, like hiring and firing, setting work hours, issuing direction to employees, determining compensation, and handling day-to-day recordkeeping.”[14]

The Act was created to protect middle class businesses. The Browning-Ferris joint employer standard stands to make “big businesses bigger, and the middle class smaller by discouraging companies from franchising and contracting work to small businesses.”[15] The Republicans, who are supporting this bill, are concerned about this. Senator Johnny Isakson, a Republican from Georgia, fears that “changing the joint

employer standard will impede franchising by taking away the benefits of a small entrepreneur being able to start a small business and grow it using a brand name that was established by a major corporation.”[16] If there are no incentives for the small guys to franchise and grow, it will only “make the big guys bigger and [put] the small guys out of business.”[17]

Hopefully, the new legislation will be passed. Journalists speculate that the legislation should pass through the House easily, but may have a rougher time getting through the Senate, and ultimately will be vetoed by President Obama.[18] If the Browning-Ferris standard stays in place, it will be harmful to small businesses and entrepreneurs across the country.

[1] Ben James, 4 Things to Know About the NLRB’s Joint-Employer Decision, Law 360, (Aug. 28, 2015), http://www.law360.com/articles/696698/4-things-to-know-about-the-nlrb-s-joint-employer-decision.

[2] Bicameral Bills to Roll Back NLRB’s Joint Employer Standard Introduced- Federal Legislation, Accommodating Disabilities– Business Management ¶75,066D 2015 WL 5278009 (Wolters Klwer 2015).

[3] Browning-Ferris Indus. of Cal., Inc., Decisions and Orders of the National Labor Relations Board, 2015 NLRB Lexis 672 (2015).

[4] Id.

[5] James, supra note 2.

[6] See generally Browning-Ferris Indus. of Cal., 2015 NLRB Lexis 672.

[7] H.R. 3459, 114th Cong. (2015).

[8] Legislation Introduced to Roll Back NLRB ‘Joint Employer’ Decision, Staffing Industry, (Sept. 10, 2015), http://www.staffingindustry.com/Research-Publications/Daily-News/Legislation-introduced-to-roll-back-NLRB-joint-employer-decision-35325.

[9] News Release, Johnny Isakson, U.S. Senator, (Sept. 10, 2015)(on file with author).

[10] Kent Hoover, Business Backs Bill to Overturn NLRB’s ‘Joint Employer’ Rule, The Business Journals, (Sept. 9, 2015 5:03pm), http://www.bizjournals.com/bizjournals/washingtonbureau/2015/09/business-backs-bill-to-overturn-nlrbs-new-joint.html.

[11] H.R. 3459 at §2.

[12] Id.

[13] See News Release, Johnny Isakson, supra, note 9.

[14] Bicameral Bills to Roll Back NLRB’s Joint Employer Standard Introduced—Federal Legislation, supra, note 2.

[15] Hoover, supra note 9.

[16] Id.

[17] Bicameral Bills to Roll Back NLRB’s Joint Employer Standard Introduced—Federal Legislation, supra, note 2.

[18] Hoover, supra, note 9.

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