With the reversal of the joint employer analysis, employers will have less labor risk (bargaining obligations and strikes) when engaging third parties like staffing companies, temporary workers, or co-located workers. Critically, the prospect of becoming bound to a bargaining obligation with another entity’s employees will be substantially less likely. Avoiding joint employer liability will focus more limiting actual control and direction of non-employees and less on the contractual arrangements with other entities supplying those employees. While this change is unlikely to dramatically change the scope of outsourcing, employers can have more certainty of the scope of potential ramifications and liability in using third party workers.

The New Standard: Work Rules

Going forward, the Board will evaluate two things when considering a facially neutral employer work rule or policy:

  1. The nature and extent of the potential impact on NLRA rights; and
  2. Legitimate justifications associated with the rule

The Board identified three categories of rules to further aid employer compliance:

  • Presumed Lawful (“Category 1”):
    • The rule, when reasonably interpreted, does not prohibit or interfere with NLRA rights, or the potential adverse impact on protected rights is outweighed by its justifications
    • Includes “no camera” and “civility” policies, as well as other safety-related rules
  • Individualized Scrutiny (“Category 2”):
    • The rule warrants individualized scrutiny because of a potential adverse impact on NLRA rights
    • Likely includes social media, “no gossip,” solicitation/distribution, and property/equipment usage policies
  • Presumed Unlawful (“Category 3”):
    • The rule is generally unlawful because its potential interference with the exercise of protected rights outweighs any possible justifications
    • Likely includes prohibitions on discussion of “confidential” information regarding terms and conditions of employment, wage information, etc.

The New Standard: Joint Employer Analysis

The new/old standard for determining joint employer liability will be as follows:

Two or more entities will be deemed joint employers under the 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.

The former test (Browning-Ferris) focused on reserved rights to control, whether or not exercised.

More Detail on the Cases

The case reversing work rule analysis is The Boeing Company and can be found here. The case involved Boeing’s no-camera policy, which restricted employees from using camera enabled devices, such as cell phones on company property. Board precedent under the Lutheran Heritage standard required the Board to find an otherwise neutral policy overbroad if employees could “reasonably construe” it to bar them from exercising protected rights. The Board embraced employer concerns and critiques of Lutheran Heritage when adopting its new standard: “the Lutheran Heritage standard prevents the board from giving meaningful consideration to the real-world ‘complexities’ associated with many employment policies, work rules and handbook provisions” and “produced rampant confusion for employers, employees and unions.”

The case reversing the joint employer analysis is Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co. and can be found here. The case involved the termination of striking employees and the alleged joint employer status of two construction companies. Importantly, although the Board reversed the Browning-Ferris standard and reverted to the more employer-friendly joint employer standard, it agreed with and upheld the Administrative Law Judge’s ruling that the two employers in the case were in fact joint employers, even under the new standard, because they both exercised substantial control over the terminated employees. Therefore, while the case changed the applicable law, the result was that both employers remained joint and severally liable for the unlawful termination of striking employees.