The National Labor Relations Board on Aug. 27 scrapped decades of precedent with a decision that greatly expanded the definition of a “joint employer” to include entities that exert even indirect control over another organization’s employees.
The NLRB’s ruling in Browning-Ferris Industries could upend the practices—and increase legal liability—of any employer that uses staffing agencies, on-site contractors or outside suppliers to perform work, as well as companies that operate on a franchise basis.
However, the decision faces almost certain legal challenge, and legislation is already circulating in Congress to overturn it.
The case is Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (August 27, 2015). The immediate effect of the decision was straightforward: The Teamsters Union will be able to count the votes from an April 2014 election asking whether employees of Leadpoint Business Services—which provides workers to a Browning-Ferris Industries recycling plant in California—wanted to form a union.
But the ballot listed both Leadpoint and Browning-Ferris as employers. An NLRB regional director impounded the ballots, saying that Browning-Ferris was not the workers’ employer. The Teamsters appealed—and with the Aug. 27 decision, won.
But the NLRB chose to use the case as a chance to revisit its longstanding definition of “joint employer.” Before, two entities could be considered joint employers under the National Labor Relations Act (NLRA) if both entities exercise “direct and immediate control” over the terms and conditions of employment.
The revised definition the NLRB adopted in Browning-Ferris “eliminates the requirement that the control be either immediate or direct and considers the potential … one party has to directly or indirectly control the employment terms of another entity’s workers,” according to Ogletree Deakins attorney Mark G. Kisicki, who represented Browning-Ferris before the board.
Critics of the decision say it will make it easier for unions to win representation in more workplaces. Even more worrisome: that companies could be held jointly liable for unfair labor practices and employment law violations committed by their contractors.
It will take at least two years for courts to rule on the legality of the NLRB’s joint employer definition. In the meantime, employment law attorneys have begun urging clients who contract for workers with other entities to consider:
- Amending their contracts to explicitly spell out that the providers control the terms and conditions of employment.
- Severing ties with outside temp agencies and contractors, bringing those jobs in-house instead.