- The 2015 Browning-Ferris joint employment test has been overturned.
- The NLRB has reverted back to the pre-2015 joint employment test.
- Employers should evaluate how this may impact their labor relations and related business decisions.
The shifting labor landscape under the new administration took another U-turn late last week when the National Labor Relations Board (NLRB or Board) overturned the August 2015 Browning-Ferris joint employment test. By a vote of 3‑2, the Republican-majority NLRB returned to the pre-2015 standard used to determine joint employer status.
Before August 2015, the standard in place for decades was that for joint employer status to be established, both entities had to control and/or determine essential terms and conditions of employment. Such essential terms and conditions of employment typically included the ability to hire, fire, supervise and direct employees. Furthermore, the type of control over the essential terms and conditions had to be immediate and direct. The issue before the Board in the 2015 Browning-Ferris Industries of California, Inc. case was whether recycling company Browning-Ferris could be considered a joint employer with LeadPoint, a staffing company which supplied some of its workers. Since LeadPoint hired, fired, disciplined and evaluated its own employees, there was little chance of finding Browning‑Ferris to be a joint employer under the established standard.
However, the NLRB altered the standard, reasoning that because the way in which work is performed had changed in recent years, a change in the law was necessary. The Browning-Ferris majority was driven by a desire to ensure that collective bargaining is not foreclosed by business relationships that allegedly deny employees the right to bargain with employers that share control over essential terms and conditions of employment. The Board’s new test found joint employment status when two entities share or determine together matters governing the essential terms and conditions of employment. The control exercised no longer had to be immediate or direct. Additionally, the Board added on to the definition of essential terms and conditions to include activities such as setting work hours, assigning work and determining the manner and method of work performance. Employers and amici expressed concern that creating liability for them as joint employers of workers they did not actively direct and control would lead to a great deal of uncertainty and instability as they attempted to conduct business.
December 14, 2017 Decision
On December 14, 2017, in the Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co. cases, the Board affirmed an administrative law judge decision that found five Hy-Brand employees and two Brandt employees had been unlawfully discharged from their employment for having engaged in work stoppages based upon concerns involving wages, benefits and workplace safety in violation of their rights under Section 8(a)(1) of the National Labor Relations Act. However, splitting along party lines, the majority of the Board then proceeded to expressly overrule the legal standard in Browning-Ferris for determining a joint employer even though it was inessential to affirming the holding of the administrative law judge that the employees at issue had been unlawfully discharged. The Board overruled the legal standard in Browning-Ferris that allowed for a determination of joint employers even when the two entities had never exercised joint control over essential terms and conditions of employment, and/or when any joint control is not “direct and immediate,” but when there exists merely “reserved” joint control, or indirect control, or control that is “limited and routine.” On December 14, the Board found the joint employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control), that the control must be “direct and immediate” (rather than indirect), and that joint employer status will not result from control that is “limited and routine.”