Last month, the Board took a major step in turning the advice in the July 2014 memorandum into actual law. The Board held in a 3-2 decision that companies may be held to be joint employers if they “share or codetermine those matters governing the essential terms and conditions of employment.” The Board’s decision in Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186 (Aug. 27, 2015), overturns long-standing precedent that had found franchisors to be too far removed from the day-to-day decisions of franchisees to be considered joint employers. In reaching their decision, the three members of the majority explained that the NLRB’s standards simply did not recognize the realities of today’s workforce in which far more contingent workers are employed by employment agencies.
The genesis of the Browning-Ferris dispute began in August 2013, when a regional director for the NLRB held that a Browning-Ferris subsidiary was not a joint employer of workers provided by a subcontractor under a labor services agreement. The International Brotherhood of Teamsters appealed the regional director’s determination and the NLRB granted review. In granting review, the Board explained that it intended to consider the continuing vitality of two of its cases from 1984. In those two cases, the Board had announced a joint employer standard that required a showing that a joint employer exercised “substantial direct control” over an employment relationship.
The Board majority noted that the two 1984 cases were based on an earlier decision from the U.S. Court of Appeals for the Third Circuit, NLRB v. Browning-Ferris Industries of Pennsylvania, Inc. In that case, the Third Circuit had found that employers could be considered joint employers if they “share or codetermine those matters governing the essential terms and conditions of employment.” Returning to the standard in that case, the Board majority found that, since 1984, the NLRB had improperly focused on “actual control” of workers in determining a joint employer status, rather than the common law principle that focuses on the “right to control” employees.
Under the new standard announced by the majority Board, companies may be considered joint employers if they are employers within the meaning of the common law (i.e. have the “right to control”) and they share or codetermine those matters governing the essential terms and conditions of employment. Consequently, not only will evidence of direct control be relevant to determining joint employer status, but evidence of indirect or potential control over working conditions will also influence the determination.
