National Labor Relations Board Decision on Browning-Ferris

Will the National Labor Relations Board Decision on Joint-Employer Status (Board Decision on Browning-Ferris Industries of California) change the test on joint employer relationships? 

The National Labor Relations Board (NLRB) issued a much awaited decision on August 27, 2015 on the Browning-Ferris Industries of California case that greatly broadens the definition of who is a joint employer.  NLRB’s decision on the newly expanded test held that two or more, otherwise unrelated employers, may be found to be a joint employer of the same employees under the NLRA (Act), if they share or co-determine those matters governing the essential terms and conditions of employment. In determining whether a putative joint employer meets the standard, the initial inquiry is whether there is a common-law employment relationship with the employees in question.  If this common-law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses sufficient control over employee’s essential terms and conditions of employment to permit meaningful collective bargaining.  This decision affects both unionized and non-union companies and even entities that have no employees on their own.  The decision has broad implications for other employment laws and governmental agencies such as the DOL, EEOC and OSHA.  

Who May Be Impacted?

All industries are impacted by this decision The examples listed in the decision document can potentially affect the organizations listed below: 

• Insurance companies that require employers to take certain actions with employees in order to comply with policy requirements for safety, security, health, etc.;
• Franchisors
• Banks or other lenders whose financing terms may require certain performance measurements;
• Any company that negotiates specific quality or product requirements;
• Any company that grants access to its facilities for a contractor to perform services there and then continuously regulates the contractor’s access to the property for the duration of the contract;
• Any company that is concerned about the quality of the contracted services;
• Consumers or small businesses who dictate times, manner, and some methods of performance of contractors

What Industry Experts are Recommending Businesses Should Consider¹:

According to Seyfarth Shaw, LLC “Every business should assess the risk of joint employer liability with its suppliers, vendors, contractors, franchisees, service providers or others. There is no single or simple solution to the issue; each relationship will need to be considered in light of - as the NLRB puts it - the “industrial realities” to develop the most effective responses.

In the meantime, businesses that want to respond proactively and attempt to protect themselves from today’s decision, may want to take several steps:

• Review and modify service agreements with third parties;
• Ensure that third parties establish separate terms and conditions of employment, employment policies and employee handbooks;
• Distinguish the work performed by your employees from the work performed by the other entities’ employees;
• Where possible, establish payment structures for service providers not based on wage rates and hours of work rendered by non-employees; and
• Consider broad indemnification agreements with third parties.

While each situation will be unique and require a thoughtful analysis of the facts, relationships with third parties, and business needs; steps can be taken to reduce the risk of a joint employer determination.

Other experts feel that the Board’s decision will not be the final word on the joint employment test.²  According to Littler Mendelson P.C., “The Board's decision will not be the last word on the joint employment test.  Initially, the decision is likely to be appealed.  Furthermore, litigation will be required to resolve the myriad issues left unanswered by the Board in Browning-Ferris.  If this new joint employer standard survives judicial review, NLRB Regional Directors, the Board and the courts will struggle for years to come to determine whether companies are joint employers, at the expense of employers nationwide.”

¹Seyfarth Shaw LLP Management Alert-How Will Browning - Ferris change the Test for Joint-Employer Status and Non-Union Employers? By Richard L. Alfred, Marshall B. Babson, Joshua L. Ditelberg, Bradford L. Livingston, Stuart Newman, and Karla E. Sanchez

²Littler Mendelson, P.C. Insight-NLRB Imposes New "Indirect Control" Joint Employer Standard in Browning-Ferris  By Michael, Lotito, Maury, Maury, Baskin and Missy Parry on August 28, 2015

NOTE: Aurico Reports Inc. is not a law firm.  Nothing presented in this communication is intended or should be construed as legal advice. You should always seek the advice of your own legal counsel.