NLRB Expands Scope of “Joint Employer” Status to Include Contractors & Franchisees
Labor & Employment @lert
Date: August 31, 2015
On August 27, 2015, the National Labor Relations Board (“NLRB” or “Board”) held that two or more employers are “joint employers” for the purposes of collective bargaining if they “share or codetermine those matters governing the essential terms and conditions of employment.” Browning-Ferris Ind. of Cal., Inc. v. Teamsters Local 350, 362 NLRB No. 186 at p. 2 (August 27, 2015) (internal quotes omitted). In so doing, the Board claimed that it was continuing to enforce the standard set forth in Board precedent established in TLI, Inc. 271 NLRB 798 (1984) and Laerco Transportation, 269 NLRB 324 (1984), but rejecting the “limiting requirements that the Board has imposed – without foundation in the statute or common law” after these decisions. In short, the NLRB’s decision will make most independent contractors and franchisees employees under the National Labor Relations Act (NLRA) and permit the employees to engage in collective bargaining. Moreover, the NLRB held that this new standard shall apply retroactively.
In reaching this conclusion, the NLRB specifically rejected factors that it has adopted and applied for nearly 30 years regarding joint employer status. Historically, the NLRB required that a joint employer possess and exercise the authority to control employees’ terms and conditions of employment, but the NLRB directly rejected such a requirement going forward. Moreover, the NLRB reversed its prior precedent which required that the authority be “direct” control as opposed to indirect control. Under the NLRB’s new ruling, control over the terms and conditions of employment, even if it is through an intermediary, may establish joint employer status. Still, the NLRB’s creation of the joint employer standard is not unlimited. Rather, the NLRB explained that finding joint employer status requires “the existence of a common law employment relationship” if the putative joint employers also “share or codetermine those matters governing the essential terms and conditions of employment.”
Notably, this decision follows closely on the heels of the Department of Labor’s recent pronouncement that most workers are employees under the Fair Labor Standards Act using the economic realities test. The dissent in the Browning-Ferris decision argues that the new joint employer standard is in fact using a similar economic realities test under the NLRA. The majority opinion discusses this point in its decision and rejects the argument. Regardless of which opinion is correct, the new standard clearly and intentionally expands the scope of joint employment under the NLRA , and reflects a growing trend in the country towards protecting the contingent workforce which currently comprises 5.7 million workers and over 4 percent of the U.S. workforce, according to the NLRB.
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