The National Labor Relation Board’s (NLRB) General Counsel, Richard Griffin, recently issued multiple unfair labor practice complaints, finding that a nationwide company along with its franchisees are “joint employers” responsible for the treatment of franchisees workers. Underlying the General Counsel’s decision is the position he has staked out before the NLRB in connection with another pending case, Browning-Ferris Indus., 32-RC-109864.

In an amicus brief submitted to the NLRB in that matter, the General Counsel argued that the Board should adopt a new standard for determining whether a joint employment relationship exists. According to the General Counsel’s brief, the overarching principle for this new standard is that the duty to bargain should cover entities that are “essential” for “meaningful” bargaining.

As the General Counsel explains in his brief to the Board:

[T]he Board…[should] find joint-employer status where, under the totality of circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working conditions of the other entity’s employees such that meaningful bargaining could not occur in its absence.

The General Counsel further contends that, under  this approach, the Board would return to its traditional standard and draw no distinction between the type of control – whether direct, indirect, or potential – the putative joint employer is found to exercise over working conditions. Instead, the General Counsel urged the Board to find joint employer status where “industrial realities” make a party “essential for meaningful  bargaining.”

Elaborating on this position, the General Counsel noted that, historically, the Board looked to see whether the putative joint employer controlled:

  • Wages
  • Employee personnel issues
  • The number of employees needed to perform a task
  • The work hours, schedules, work week length, and shift hours
  • Employee grievances
  • Authorizing overtime
  • Safety rules and standards
  • Production standards
  • Break and/or lunch periods
  • Assignment of work and determination of job duties
  • Work instructions relating to the means and manner to accomplish a task
  • Training employees or establishing training requirements
  • Vacation, holiday leave, and pay policies
  • Discipline and discharge
  • Hiring

The General Counsel, however, clarified that he considered control over even a few of these criteria sufficient to demonstrate the requisite control over “bargainable topics…and other important terms and conditions of employment that substantially affect employees’ work life.” Thus, “even if the putative joint employer only controls work assignments,” that would be enough to make them essential to the bargaining process, given the impact work assignments have on topics like seniority or how to measure employee performance.

Further explaining the expansive test he advocates, the General Counsel further argued that, under the prior Board standard:

  • Indirect control over certain terms (e.g., where a supplier firm only raised wages when it received a raise from the contracting party) could be sufficient to establish a joint employer relationship, due to the indirect control granted by the governing commercial relationship
  • Potential control (i.e., the unexercised ability to control employment conditions reserved in a commercial agreement) would also be sufficient to establish a joint employer relationship
  • Even in the absence of a commercial contract, where the facts demonstrated that the nature of the commercial relationship (e.g., through historical custom and practice) effectively granted significant control over another party’s terms and conditions of employment, such control would make the party possessing such leverage “a necessary party to meaningful collective bargaining.”

The breadth and potential unlimited scope of such a test cannot be overstated. Under the General Counsel’s view, any legitimate commercial leverage that one party might exercise on terms and conditions of employment, however attenuated or unexercised, could give rise to finding that they are a joint employer.

This potential expansion of the joint employer doctrine would also degrade the existing rules that prohibit the use of secondary pressure against third parties. According to the General Counsel, “the boarder standard would allow employees to use traditional economic weapons to exert lawful economic pressure on those parties who realistically control the economics of the relationship – even if they do not ‘directly’ control working conditions.” From the General Counsel’s perspective, this expansion of the entities that might become ensnared in a labor dispute would actually help achieve industrial and labor peace.

For now, the General Counsel’s theory of liability above does not carry the force of an NLRB decision. However, if his argument is accepted by the Board in Browning-Ferris, that determination may have wide- reaching effects on an broad array of companies that rely on franchise models to run their business. It may also impact any other commercial relationships that might have the indicia outlined above.