We previously reported on the Browning-Ferris Industries of California decision that expanded the definition of joint employer. There, the Board established a new standard in which a company could be a joint employer of employees if it merely possessed the authority to control the employees’ terms and conditions of employment even if such authority was not exercised.
Senator Lamar Alexander (R-TN) recently introduced the “Protecting Local Business Opportunity Act,” seeking to overturn the Board’s new joint employer standard. Senator Alexander explained that the Board’s new standard “would make big businesses bigger and the middle class smaller by discouraging companies from franchising and contracting work to small businesses.” The Senator’s legislation would amend the Board’s definition of “employer” to restore it to pre-Browning-Ferris status so that two or more employers are joint employers only if they both share and exercise control over essential terms and conditions of employment and if such control is actual, direct, and immediate.
The Browning-Ferris decision is easily one of the most significant Board decisions of 2015. We are hopeful this legislation will reverse the negative effects of Browning-Ferris. But, until passed, the Board will continue to apply the expanded definition of joint employer in its rulings. Therefore, any company that subcontracts any of its work must take a critical look at its contracts to determine whether it has the authority to control any of the work of the subcontractor’s employees. If so, the Board may disregard the contract and determine both companies are joint employers of the subcontractor’s employees.