On August 27, in a highly anticipated decision, the National Labor Relations Board adopted a new joint employer standard, dramatically changing and expanding the long-held standard previously in use. Regardless of whether your workforce is unionized or not, this new standard has far-reaching implications.

What Has Changed?

In Browning-Ferris Industries, the Board adopted a new joint employer standard and held that a company can be the joint employer of workers who are provided by another organization if the two organizations “share or codetermine matters governing the essential terms and conditions of employment.” The Board stated that the new, broader standard better carries out the purpose of the National Labor Relations Act and ensures employees’ bargaining rights are protected to the fullest extent.

While the previous standard required that an employer exercise direct control over workers to be liable as a joint employer, it is now not necessary for an employer to exercise direct control over the workers to be held as a joint employer. An employer who indirectly controls the workers, or even has simply reserved the right to do so, may be a joint employer.

Does the New Standard Apply to My Company?

While the Browning-Ferris Industries decision involved a staffing company, the language of the decision indicates the new joint employer standard could also apply to franchises and other business relationships. If your company:

  • Uses temporary workers from sourcing firms
  • Is a parent company with subsidiaries
  • Is a general contractor with subcontractors
  • Is a franchisor with franchisees
  • Regularly uses vendors or service providers

your company could be a joint employer with the company who directly employs the workers in question.

How Does This New Standard Affect My Company?

The new joint employer standard has numerous implications. It potentially expands the scope of entities that may have collective bargaining obligations. Now, more companies may have an obligation to engage in collective bargaining with the workers of related organizations. Companies could also be held responsible for the unfair labor practices of another, related organization, including being held liable for interfering with workers’ rights to organize or to engage in protected concerted activity.

Noteworthy, the National Labor Relations Act protects workers even when there is no union activity in the workforce. Given the NLRB’s recent focus on non-unionized organizations, including the close scrutiny of handbook provisions and disciplinary policies, the Board will likely apply the new joint employer standard to non-unionized work places. In addition, this ruling could influence other government agencies’ views on joint employer status, including the DOL, OSHA, the EEOC, and other agencies.

What Should I Do?

Now is a good time to take a closer look at your business relationships. Make sure you have confidence that your current business partners are in compliance with labor laws and other laws. In addition, you should review the level of control your company exercises, as well as the level of control you have the ability to exercise, over the workers of related entities, and whether the degree of control is appropriate.