National Labor Relations Board Issues Decision Expanding Joint-Employer Status Under the NLRA

On August 27, 2015, the National Labor Relations Board (the Board) (in a 3-2 decision) issued its long-awaited decision in Browning-Ferris, 32-RC-109684, on the issue of joint-employer status under the National Labor Relations Act (NLRA). Prior to Browning-Ferris, the Board’s longstanding test for joint-employer status was whether the putative joint-employer retained sufficient control over the terms and conditions of employment of the putative employees and directly and immediately exercised such control. Under this standard, the Board repeatedly refrained from finding joint employment where the control exerted by a company was limited and routine (e.g., where a supervisor’s instructions consist primarily of telling employees what work to perform or where and when to perform the work, but not how to perform the work). In Browning-Ferris, however, the Board rejected this test, and instead instituted a broader and more malleable standard that makes it both easier to make a finding of joint-employer and harder to predict how the Board will rule.

 
Specifically, under the new Browning-Ferris test, the Board will find that a putative employer is a joint-employer so long as it is an employer within the meaning of the common law and if it shares or codetermines those matters governing the essential terms and conditions of employment. To determine the common law prong of this test, the Board will look to whether the putative employer retained for itself the right to control the terms and conditions of the workers it uses. To determine whether two entities “share or codetermine those matters governing the essential terms and conditions of employment,” the Board stated that it will simply “consider the various ways in which joint-employers may ‘share’ control over terms and conditions of employment or ‘codetermine’ them.” Critically, the Board expressly declined to delineate all the ways in which dual entities may “share” control or “codetermine” terms and conditions of employment, stating instead that what constitutes a sharing of control or codetermination of terms and conditions of employment will depend on the circumstances of each case. It did make clear that a putative employer need not actually engage in any direct or immediate control over the terms and conditions of employment, but that it may be an employer even if it only had indirect control through the setting of maximum wages, production standards and shift times. 

Applying this new standard, the Board went on to find that Browning-Ferris was the joint-employer of a group of sorters, screen cleaners and housekeepers assigned to work at its facility by a staffing agency. The Board found determinative the facts that: (1) the contract between Browning-Ferris and its staffing agency required the staffing agency to only staff employees who met Browning-Ferris’s standard selection procedures and tests; (2) the contract retained for Browning-Ferris the right to reject any worker; (3) Browning-Ferris supervisors controlled the pace of work by setting production standards and providing directions to the staffing agency’s managers; (4) the contract prevents the staffing agency from paying its employees more than what Browning-Ferris employees made performing comparable work; and (5) Browning-Ferris specifies the number of workers that it requires, the timing of shifts and the necessity of overtime work. Thus, even though Browning-Ferris did not directly dictate the bargaining unit employees’ terms and conditions of employment, the Board nevertheless found joint-employer status because Browning-Ferris—through its contract with the staffing agency and setting of production standards and times of working needs—indirectly codetermined the wages, hours and other conditions of employment for those employees.

One minor, but still welcomed, limitation that the Board expressed in its order is that a joint-employer is only responsible to bargain on those terms and conditions that it has retained control over.

Browning-Ferris dramatically expands the scope and circumstances upon which a company using staffing agencies can be found liable as joint-employers. Companies that use staffing agencies to supplement their own staffing needs, including many healthcare providers, are advised to review the contracts they have with their staffing agencies to identify areas in which the Board may find they have retained control over the terms and conditions of employment. In addition, companies should also examine the day-to-day realities of how they communicate production requirements, qualifications and standards to third-party staffing agencies to assess the likelihood that the Board would find a joint-employer relationship.
 
If you have any questions regarding this Sidley Update, please contact the Sidley lawyer with whom you usually work, or
 

Douglas R. Hart Partner dhart@sidley.com +1.213.896.6016

 

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Employment and Labor Practice

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