We have written previously about the National Labor Relation Board’s 3-2 decision in Browning-Ferris of California, Inc., 362 NLRB No. 186 (August 27, 2015), increasing the likelihood the Board may find two employers to be “joint employers,” and thereby share many collective bargaining responsibilities as well as liability for each other’s violations of the National Labor Relations Act. See “Labor Board Sets New Standard for Determining Joint Employer Status” (August 25, 2015).  While the NLRB in Browning-Ferris said it would continue to examine whether the putative joint employers ‘“share or codetermine those matters governing the essential terms and conditions of employment’” of the employees in question, it also announced it no longer will require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. “Reserved authority” to exercise control, it said, was relevant. Furthermore, the Board said it would no longer require that an employer’s control over employees be exercised “directly and immediately.” “If otherwise sufficient, control exercised indirectly – such as though an intermediary – may establish joint employer status,” it concluded. Thus, a host employer could be found a joint employer of its contractor’s employees because of its exercise of “indirect control.”

Among the circumstances the NLRB in Browning-Ferris said contributed to a joint employer finding were those pertaining to drug and alcohol testing. The contracting firm (Leadpoint) was required by its agreement with Browning-Ferris (BFI), the host employer, to ensure that all employees referred to BFI passed a five-panel urinalysis drug screen or similar test as agreed to in writing with BFI. Leadpoint was not allowed to refer workers who did not pass the test. Furthermore, BFI could request written certification of such test completion. Even after an employee was referred to BFI, Leadpoint was responsible for ensuring the employee remained free from the effects of alcohol and drug use and in condition to perform his job duties for BFI. The drug tests were administered through the Leadpoint HR department.

The Board also relied on events taking place after employees went to work at the BFI facility. It found that discipline of two Leadpoint employees was “prompted by BFI action.” BFI’s operations manager emailed Leadpoint’s CEO that two Leadpoint employees were observed passing a pint of whiskey at the jobsite. As a result, the two employees were removed and sent immediately for drug and alcohol screening. The Leadpoint CEO stated that BFI’s email “request[ed] [the employees’] immediate dismissal.” Following investigation, Leadpoint terminated one employee and reassigned the other. BFI’s agreement with Leadpoint gave BFI the right to remove any employee from its premises.

The Board found the pre-employment drug testing showed “BFI possesses significant control over who Leadpoint can hire to work at its facility,” and that although BFI did not participate in Leadpoint’s day-to-day hiring process, “it co-determines the outcome of that process by imposing specific conditions on Leadpoint’s ability to make hiring decisions.” Similarly, the removal of the two employees suspected of alcohol violations at work showed “BFI possesses the same unqualified right ‘to discontinue the use of any personnel’ that Leadpoint has assigned.” Indeed, in the Board’s view, BFI’s rights under the agreement signified “the outcome was preordained….”

These facts contributed to a joint employer finding by the NLRB. Requirements by host employers that their contractors’ employees successfully pass pre-employment or pre-assigned drug tests are not uncommon. Neither are agreements under which host employers reserve the right to determine who can remain on their premises, including instances where substance abuse policy violations are detected. After Browning-Ferris, employers may want to reconsider whether they prize their ability to control contractors’ employees on their premises more than their freedom from labor law liability.