Today, the National Labor Relations Board (“NLRB”) released the long-awaited final version of a new rule on the legal test for determining whether two or more companies are joint employers for the purposes of collective bargaining and liability for violations of the National Labor Relations Act (NLRA). The joint-employer rule has a complicated history dating back to 2015 when the NLRB overturned the previous long-standing joint employer standard of 30 years which required “direct and immediate control” of the terms and conditions of workers’ employment.
In Browning-Ferris Industries, 362 NLRB No. 186 (2015) (“Browning-Ferris”), the NLRB drastically lowered the standard to allow for a joint-employer relationship even where companies merely possess an unexercised right to indirectly control a single term or condition of the employment of workers employed by another company. The Browning-Ferris rule virtually guaranteed that a contract between a company and labor supplier would result in joint employer liability under the NLRA. Read more on the decision in our E-Blast article here.
Two years later in 2017, the NLRB overturned the Browning-Ferris decision in its “Hy-brand” decision, restoring the previous requirement of direct and immediate control of workers. See our E-Blast article on that decision here. It appeared that Browning-Ferris was dead at that point, but a few months later, the NLRB vacated the Hy-brand decision due to a procedural error, effectively reinstating the Browning-Ferris standard. Revisit our E-Blast on that topic here. To put the issue to rest, the NLRB proposed a new rule in September 2018, which we reported in our E-Blast article available here.
We now have the final version of the joint-employer rule. Effective April 27, 2020, the NLRB will find a joint-employer relationship only where two or more companies have “substantial direct and immediate control” over workers. Examples of “substantial, direct and immediate control” include hiring, firing, discipline, supervision, and direction. Indirect control and contractual reservation of authority will no longer be sufficient to establish joint-employer liability. This rule essentially reinstates the old rule prior to Browning-Ferris, alleviating much of the chaos and uncertainty of labor relations during the past several years. The NLRB will apply this standard to future cases, and the courts typically defer to the agency rule.
COUNSEL TO MANAGEMENT:
When the new rule takes effect on April 27, 2020, it appears that the Browning-Ferris decision will finally be dead, and the new NLRB joint-employer rule will provide more clarity and stability in labor relations. Going forward, the NLRB will deem a company a joint employer under the NLRA only if it exercises “substantial direct and immediate control” over another company’s workers. If you have any questions about how the new rule applies to your company, and whether you may be a joint employer under the new rule, contact the labor relations experts at the Saqui Law Group, a division of Dowling Aaron Incorporated.
By: Kellen Crowe