Labor & Employment Law | NLRB Expands Joint Employer Standard

Client Alert

September 8, 2015

NLRB Expands Joint Employer Standard

Last week, the National Labor Relations Board issued its long-awaited joint employer decision in Browning-Ferris Industries, 362 N.L.R.B. No. 186 (2015). In a lengthy decision, the Board majority overruled the decades-old test of determining joint employer. While giving lip-service to the prior standard of determining whether the alleged joint employers share or co-determine those matters governing the essential terms and conditions of employment, the majority announced:

  1. We will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. Potential control will now be sufficient; and
  2. Nor will we require that, to be relevant to the joint-employer inquiry, a statutory employer’s control must be exercised directly and immediately.

Examples of evidence establishing a joint employer relationship included:

  • requiring a pre-employment drug test
  • insisting that employees fired by the contractor not be hired by the supplier
  • retaining the right to discontinue using a particular employee
  • determining the number of workers needed
  • setting productivity goals
  • dictating shift times
  • limiting overtime and
  • capping wage rates

The dissenting members contended that the change will subject countless entities to unprecedented new joint-bargaining obligations and potential joint liability.

Recommended Action

Because the majority refused to provide any broad guidance or rules, the new standard will be applied on a case-by-case basis after reviewing all facts. Therefore, it is recommended that employers review all labor service contracts to assess the risk of an unwanted joint employer finding under the new rule.

If you have further questions or would like to discuss strategies to manage these developments, please contact a member of Downs Rachlin's Labor and Employment Law Group.

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