On August 27 2015 the National Labour Relations Board (NLRB) issued its long-awaited decision in Browning-Ferris (32-RC-109684) on the issue of joint employer status under the National Labour Relations Act. Before Browning-Ferris, the NLRB's longstanding test for joint employer status was whether the alleged joint employer retained sufficient control over the terms and conditions of employment of the alleged employees and directly and immediately exercised such control. Under this standard, the NLRB repeatedly refrained from finding joint employment where the control exerted by a company was limited and routine (eg, where a supervisor's instructions consisted primarily of telling employees what work to perform or where and when to perform it, but not how to perform the work). However, in Browning-Ferris the NLRB rejected this test and instead instituted a broader, more malleable standard that makes it both easier to make a finding of joint employer and harder to predict how the NLRB will rule.
Under the new Browning-Ferris test, the NLRB will find that a party is a joint employer if it:
- is an employer within the meaning of the common law; and
- shares or co-determines matters governing essential terms and conditions of employment.
To determine the common law aspect of this test, the NLRB will look to whether the putative employer has retained for itself the right to control the terms and conditions of the workers it uses. To determine whether two entities "share or codetermine those matters governing the essential terms and conditions of employment", the NLRB stated that it will simply "consider the various ways in which joint employers may 'share' control over terms and conditions of employment or 'codetermine' them".
Critically, the NLRB expressly declined to delineate all the ways in which dual entities may 'share' control or 'co-determine' terms and conditions of employment, stating instead that what constitutes a sharing of control or co-determination of terms and conditions of employment will depend on the circumstances of each case.
The NLRB clarified that an alleged employer need not actually engage in any direct or immediate control over the terms and conditions of employment, but that it may be an employer even if it has only indirect control through the setting of maximum wages, production standards and shift times.
Applying this new standard, the NLRB went on to find that Browning-Ferris was the joint employer of a group of sorters, screen cleaners and housekeepers assigned to work at its facility by a staffing agency. The NLRB found the following facts determinative:
- The contract between Browning-Ferris and its staffing agency required the staffing agency to staff only employees who met Browning-Ferris's standard selection procedures and tests;
- The contract retained for Browning-Ferris the right to reject any worker;
- Supervisors at Browning-Ferris controlled the pace of work by setting production standards and providing directions to the staffing agency's managers;
- The contract prevented the staffing agency from paying its employees more than what Browning-Ferris's employees made performing comparable work; and
- Browning-Ferris specified the number of workers that it required, the timing of shifts and the necessity of overtime work.
Thus, even though Browning-Ferris did not directly dictate the bargaining unit employees' terms and conditions of employment, the NLRB nevertheless found joint employer status because Browning-Ferris indirectly co-determined the wages, hours and other conditions of employment for those employees, through its contract with the staffing agency and setting of production standards and times of working needs.
One minor but welcome limitation that the NLRB expressed in its order is that a joint employer is responsible to bargain only on those terms and conditions over which it has retained control.
Browning-Ferris dramatically expands the scope and circumstances in which a company using staffing agencies can be found liable as a joint employer. Companies that use staffing agencies to supplement their own staffing needs (including many healthcare providers) should review their contracts in order to identify the areas in which the NLRB may find that they have retained control over the terms and conditions of employment. In addition, companies should examine the day-to-day realities of how they communicate production requirements, qualifications and standards to third-party staffing agencies to assess the likelihood that the NLRB could find a joint employer relationship.
For further information on this topic please contact Douglas R Hart or Francis S Lam at Sidley Austin LLP by telephone (+1 213 896 6000) or email (email@example.com or firstname.lastname@example.org). The Sidley website can be accessed at www.sidley.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.