Seyfarth Synopsis: Following the NLRB’s expansion of the definition of “joint employer” in the high-profile Browning-Ferris case and the employer’s subsequent appeal to the D.C. Circuit, the EEOC filed an amicus brief supporting the broadening of both agencies’ tests for determination of joint employer status. This is a signal to employers of future agency positions on the expansion of Title VII liability.

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With government agencies and plaintiffs’ counsel alike seeking giant paydays from employers with the deepest pockets, governmental expansion of “joint employer” status is a critical development in employment law. In the 2015 landmark decision in Browning-Ferris Industries of California (“Browning-Ferris”), 362 NLRB No. 186 (Aug. 27, 2015), which was the subject of Seyfarth Shaw’s Client Alert here, the NLRB significantly lowered the bar for establishing joint employer status. Under Browning-Ferris, the NLRB may find an unrelated entity to be an “employer” for purposes of the National Labor Relations Act based on a number of possible factors, including the existence of unexercised authority over terms and conditions of employment, or by the “indirect” exercise of that authority through agents. Following Browning-Ferris’s appeal to the U.S. Court of Appeals for the District of Columbia Circuit, the EEOC recently filed its amicus brief supporting the NLRB’s expanded view of joint employer status. . . and articulating an expanded view of its own.

The EEOC’s filing is an important roadmap for employers to understand and anticipate how the EEOC will expand its own investigations and claims involving complex relationships in such contexts as staffing agencies, franchises, contractors, and corporate enterprises comprised of affiliated entities.

Case Background

Upon the petition of the International Brotherhood of Teamsters, Local 350, to represent employees of Leadpoint, the Teamsters sought to have Browning-Ferris, which contracted for temporary labor from Leadpoint, to be found to be a joint employer for purposes of the petition. At that time, the prevailing standard for determining whether a putative employer was whether the putative employer “meaningfully affect[ed] matters relating to the employment relationship, such as hiring, firing, discipline, supervision and direction.” Laerco Transportation, 269 NLRB 324, 325 (1984). This standard required a putative employer to have immediate and direct control over terms and conditions of employment. Under this standard, a regional director of the NLRB originally found that Browning-Ferris was not a joint employer with its contractor. EEOC at 2-3.

Upon review of that decision and with the support of the EEOC as amicus, the NLRB abandoned its standard and reverted to an earlier, broader standard articulated in NLRB v. Browning-Ferris Industries, 691 F.2d 1117 (3d Cir. 1982). Id. This earlier standard provides that “two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment.” Id. at 2. Further, the NLRB “will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority.” Id. at 3. In this respect, the NLRB stated it would apply an “inclusive approach” to defining “essential terms and conditions of employment,” including the setting wages and hours; dictating the number of workers to be supplied; controlling scheduling, seniority, and overtime; assigning work; and determining the manner and method of work performance. Id.

Despite acknowledging the dissent’s argument that its new standard, which allows for unexercised or indirectly exercised authority or control, lacks certainty or predictability, the NLRB reasoned that joint employer issues are nonetheless best examined and resolved in the context of specific factual circumstances. Id. at 3-4. Accordingly, applying the new, broadened standard to the facts of this case, the NLRB reversed the regional director and found that Browning-Ferris was a joint employer with its contractor. Id. at 4. Following Browning-Ferris’s appeal, the EEOC filed its amicus brief in support of the NLRB.

The EEOC’s Amicus Brief

Predictably, the EEOC supports the broadened, more ambiguous standard now adopted by the NLRB. This broadened standard more closely resembles the EEOC’s own expansive interpretation of “joint employer” status in its Compliance Manual here and Guidance here, neither of which have the force of law or are universally followed by federal courts taking up EEOC claims involving joint employer liability.

For instance, in the context of staffing companies, EEOC’s Guidance provides that a client of a staffing company may be a joint employer if the client “exercises significant supervisory control over the worker.” The Guidance further qualifies:

Clients of contract firms and other types of staffing firms also qualify as employers of the workers assigned to them if the clients have sufficient control over the workers…. For example, the client is an employer of the worker if it supplies the work space, equipment, and supplies, and if it has the right to control the details of the work to be performed, to make or change assignments, and to terminate the relationship. . . .

EEOC Enforcement Guidance: Application of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms (Dec. 3, 1997), 1997 WL 3315961, at *5-6 (emphasis added).

The standard articulated by the NLRB and supported by the EEOC potentially inoculate the “joint employer” determinations by these agencies as fact-driven and interpretive – particularly on such vague and speculative notions as unexercised or indirect control. Nevertheless, the EEOC supports the elusive new standard by asserting three arguments. First, the EEOC argues that its own test, like that of the NLRB, appropriately looks at the totality of the circumstances. EEOC at 8. Noting that its approach is “intentionally flexible” and “consistent with common law,” the EEOC explains that it does not consider one factor to be decisive, but rather all of the circumstances in the worker’s relationship with each business involved should be considered to determine who is an employer. Id. at 9-11 (citations omitted).

Second, the EEOC argues that its standard correctly allows courts to consider an entity’s right to control and indirect control of the terms and conditions of employment. Specifically, the EEOC contends that an entity’s right to control the terms and conditions of employment, whether or not it exercises that right, is relevant to joint employer status. Id. at 12. Because the right to control terms and conditions of employment is one factor among many the EEOC considers relevant to joint employer status, the EEOC concludes that the NLRB’s newly articulated standard recognizing right to control as a relevant consideration, is correct. Id. at 13.

With respect to indirect control, the EEOC similarly explains that it “has long considered indirect control to be relevant to joint employer status.” Id. After explaining that “[a] putative joint employer exercises indirect control of the terms and conditions of employment by acting through an intermediary,” the EEOC identifies several of its own determinations in which it has applied this logic. Id. at 14. The EEOC cites to no court decisions, however, in support of its expansive position.

Finally, the EEOC asserts that contrary to Browning-Ferris’s argument, a broad, fact-specific inquiry is neither vague nor unworkable. Id. at 15. The EEOC posits that “[g]iven the complexity and variety of the situations implicating joint employer status, the NLRB correctly declined to rank the elements of its test in order of importance. Id.

Although the EEOC concedes that “[t]he EEOC’s flexible joint-employer test, like the NLRB’s, carries more uncertainty than the NLRB’s now-discarded rule, which looked only at authority exercised directly and immediately,” id. at 16, the EEOC boldly contends that “[u]ncertainty, however, is no basis for rejecting a rule that is consistent with statutory language, common law, and legislative purpose.” Id.

Further, after acknowledging Browning-Ferris’s argument that the uncertain nature of the new standard will make it difficult for organizations to anticipate whether they will be deemed joint employers, and deprives employers of their right to due process, the EEOC asserts in conclusory fashion that the joint employer test itself does not violate due process. Id. at 17. Quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 327 (1992), the EEOC concludes that the Supreme Court effectively rejected Browning-Ferris’s argument when it stated the application of “the traditional agency law criteria . . . generally turns on factual variables within an employer’s knowledge.” Id.

Implications For Employers

In its recent “Enforcement Guidance on Retaliation and Related Issues” publication, which we blogged about here, the EEOC made it well-known that it maintains a watchful eye on the NLRB’s interpretations of protected activity. The EEOC’s amicus brief stands as another in a recent spate of advocacy pieces seeking to advance the EEOC’s own expansive view of joint employer status in the context of federal antidiscrimination laws. Here, the EEOC is looking to secure a circuit court opinion legitimizing a broad definition of joint employer that it then can use to pursue multiple alleged employers in discrimination claims. Accordingly, businesses contracting labor should scrutinize their workforce relationships carefully for indicia of potential for indirect as well as direct control over the terms and conditions of employment of the workforce. We will continue to update our readers as events unfold in this critical litigation.

Readers can also find this post on our Workplace Class Action blog here.