On August 27, 2015, the National Labor Relations Board (“NLRB”) issued its decision in Browning-Ferris Industries of California, Inc. and established a new, broad standard for determining when two entities are “joint employers” under the National Labor Relations Act (“NLRA”). 362 NLRB 186 (2015). Under Browning-Ferris, an entity may be a joint employer of another entity’s workers based on reserved or indirect control over those workers’ terms of employment, even if that reserved or indirect control is attenuated or never exercised at all. See Haynes and Boone’s prior alert on the topic.
Days before the long-anticipated Browning-Ferris decision was issued, a draft memo was circulated within OSHA indicating the agency’s believed new practice of inspecting franchisor-franchisee relationships for possible joint employer liability. The memorandum discusses information OSHA inspectors should obtain in order to aid in determining whether to impose joint employer status.
Among the information included in the memo is the following:
- Whether the franchisor provides the franchisee with a safety program, personal protective equipment, safety training and evaluations, instructions about keeping injury and illness data, and forms for investigating accidents and safety complaints from employees;
- Whether the franchisor is involved in the purchase of equipment or recommends which suppliers to use; and
- Whether the franchisor is involved in decisions regarding work hours, overtime, workers’ compensation, store layout, hiring, firing, hours, staffing, number of employees per shift, positions of employees, number of managers, responsibilities of managers, and job descriptions.
Industry groups are reacting, including the International Franchise Association (“IFA”), saying that the Department of Labor is engaged in a campaign to “destroy the legal separation between franchise businesses.” According to the IFA, OSHA has started asking for documentation related to joint employer liability (and unrelated to safety issues) and this exceeds OSHA’s authority.
What’s the Big Deal with Joint Employer Status Anyway?
When two employers are deemed to be “joint-employers” of workers, both become subject to the law protecting the workers, and either employer individually or both employers collectively could be held liable for violations. In practice, this determination can circumvent a franchisor’s careful attempts to prevent joint employer liability by engaging in arm’s length negotiations with its franchisees.