Last week, the National Labor Relations Board announced that it will no longer use the Browning-Ferris joint-employer test. If you don’t have a union, why should you care? This is the test that many courts consider when determining just who employed (and is therefore responsible for) an employee who is suing for any number of reasons.

What Was the Browning-Ferris Test?

You may recall that about a year ago, in Browning-Ferris Industries of California v. NLRB, et al., the NLRB implemented an unprecedented expansion of its joint-employer test. When two or more businesses share control over a worker’s terms of employment, the NLRB (and others) often need to determine who that employee’s actual employer is. The Browning-Ferris decision came up with an indirect control test in which a business with little, if any, control over an employee could qualify as the employer, resulting in many more joint-employer relationships. All that the indirect control standard required was that the entities in question be “employers” under common law precedent and share or codetermine matters regarding the employee’s terms and conditions of employment. The Browning-Ferris decision was met with much controversy, but the opposition can now rest easy, because the NLRB has restored its former joint-employer standard.

What is the Current Standard?

The original (and now current) standard focuses on the degree of direct and immediate control by employers. The test requires direct and immediate control over the essential terms and conditions of employment, such as hiring, firing, and disciplining employees. In a press release, the NLRB stated the following:

In all future and pending cases, two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine. Accordingly, under the pre–Browning Ferris standard restored today, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship.

Takeaways

This is good news for employers, as it is now harder for a worker to claim that more than one business is his or her employer. Not surprisingly, this decision is hotly contested by champions for unionization.

How can your company avoid joint-employer liability? Try some of these tips:

  1. Keep your human resources and payroll functions separate and independent.
  2. Maintain separate lines of supervision.
  3. Do not comingle equipment and resources unless all of the exchanges of such clearly are accounted for in some business fashion.
  4. Do not have one company and its C-suite governing the operation of a second company.
  5. Certainly maintain separate books and tax records.
  6. Keep brands separate.
  7. Take care of the obvious stuff, such as don’t use the same telephone number and switchboard.
  8. Use contracts, subcontracts, and consulting contracts to maintain arm’s length business obligations between the services of the companies.
  9. Maintain confidentiality of trade secrets and bidding information.
  10. Keep those union and nonunion workers as far from each other as possible.