On August 27, 2015, the National Labor Relations Board (“NLRB”) issued a ruling in which it expanded the test it will use to determine joint employer status for purposes of interpreting the National Labor Relations Act (“NLRA”). In a case commonly referred to as the Browning-Ferris case, the NLRB addressed the issue of whether Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery (“Browning-Ferris”) and FPR-II, LLC d/b/a Leadpoint Business Services (“Leadpoint”) were joint employers. Browning-Ferris, the owner and operator of a recycling facility, staffed its facility with workers provided by Leadpoint, a staffing agency. The NLRB ruled that Browning-Ferris and Leadpoint were joint employers.

In making its ruling, the NLRB announced an expanded test which overruled years of prior precedent. This new test uses a two prong analysis to determine whether two or more entities are joint employers: 1) whether the entities are both employers within the meaning of common law; and 2) whether the entities share or codetermine those matters governing the essential terms and conditions of employment. The new test looks at whether an entity possesses the authority to control the terms and conditions of its workforce, whereas the prior precedent required an entity to actually exercise its authority over its workforce to be considered a joint employer.

Entities that use staffing agencies or subcontractors to supply their workforce should be cognizant of this new rule, as they may be considered joint employers for purposes of the NLRA. This new rule could also impact the relationship between franchisors and franchisees. Further, other agencies, such as the Occupational Safety and Health Administration (“OSHA), the Department of Labor (“DOL”), and the Equal Employment Opportunity Commission (“EEOC”) may adopt the NLRB’s expanded joint employer test in the future.