The NLRB’s About-Face (Again) on Joint Employment

The NLRB handed down four decisions last week that should come as welcome news to employers after the last several years. We’ll look at one of them this week and the rest of them over the next week or two. For those of you who are new to employment law, the National Labor Relations Board’s rulings interpret employers’ obligations under the National Labor Relations Act. Many are under the misconception that the NLRA only applies to workforces represented by a union. That is not true. The NLRA and therefore NLRB rulings apply to pretty much every private employer. So with that said, let’s have a look at one of those new rulings and what it means for employers…

I am starting with HY-BRAND INDUSTRIAL CONTRACTORS, LTD. AND BRANDT CONSTRUCTION, CO., because I believe it might be the one that interests most employers. Why? It reverses the recently broadened definition of joint employer articulated by Browning-Ferris. In a nutshell, Browning- Ferris said that two or  more entities can be joint employers of the same employee(s) if each of them retain a right to control over essential employment terms, regardless of whether they actually exercised such control. (If you want to review the details of that case, you can find my previous post here.)  Specifically, the NLRB held that “even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not direct and immediate, the two entities will still be joint employers based on the mere existence of reserved joint control, or based on indirect control or control that is limited and routine.”

Browning-Ferris meant that a company could temporarily augment its workforce by contracting with a staffing agency and be joint employers of those temporary employees even if either: a) the staffing agency provided an on-site supervisor through whom control of all work conditions flowed and the workers never interfaced with anyone at the company; or, b) even if the workers worked off-site were supervised by a supervisor employed by the staffing company, as long as there was some evidence that the company could exercise control of essential terms of employment.  Browning-Ferris turned established precedent of over 30 years completely own its head.

So what happened now? Enter Hy-Brand. An Administrative Law Judge (ALJ) determined that Hy-Brand Industrial Contractors, Limited (Hy-Brand) and Brandt Construction Company (Brandt) joint employers within the meaning of the NLRA. The NLRB reviewed the ALJ’s decision. While it agreed with the conclusion, it determined that the ALJ applied the wrong standard. This Board (remember the composition has changed somewhat in the last year) said that Browning-Ferris was “a distortion of common law” and “ill-advised as a matter of policy” (not unlike what a lot of other employment lawyers who remain nameless have suggested.) In restoring the previous standard, the majority continued to strongly hint at its thoughts on Browning-Ferris in its ruling restoring the previous standard, which “has served labor law and collective bargaining well, a standard that is understandable and rooted in the real world.”

Now, if you are either new to this whole topic, or you are simply confused by all the convoluted rulings from the last few years, you are probably wondering “What is the previous standard?” That’s certainly a fair question, so let’s review it. The previous standard focuses on: a) the actual exercise of control over essential employment terms; and b) whether such control has a direct and immediate impact on employment terms; and c) whether such control is not limited and routine. Using this standard, the NLRB found that both entities were still a joint employer and remained jointly and severally liable for the alleged unfair labor practice of discharging employees on strike.

I imagine you are wondering how that new-old standard actually works. Let’s look at how the NLRB applied it in this case. The NLRB relied on the following factors in making its determination:

• The same person served as Corporate Secretary for both companies;
• The same person was involved in terminating the striking employees;
• Both entities offered and employees of each and both companies participated in the same 401k and health benefit plans;
• Employees of each and both entities attended the same training sessions;
• Employees of each and both entities attended the same annual company meeting;
• Employees of each and both entities were subject to the same employment policies.

It shouldn’t be hard to see how both entities actually exercised control over the employees.  They type of control exercised clearly had direct and immediate impact on employees working for both entities, and clearly was more than just limited or routine.

So what does this ruling mean for employers? Of course that depends on your specific situation. With that said, however, if you use staffing agencies to supply you some temporary employees but the agency truly controls all essential working conditions and terms of their employment, you will not be a joint employer of those workers. If you hire an independent contractor to do a job and the contractor determines the means, method and manner of work, and exercises all meaningful control over its employees, you will not be a joint employer of the independent contractor’s workers–even if you theoretically could do so. At the same time, however, if you have a parent-subsidiary relationship with one or more entities and you share employees, management, employment policies, benefit plans among other things, then you probably will be joint employers of those workers. Similarly, if you hire a staffing agency to provide you temporary workers, and those employees work on your premises and your company supervises, directs and controls their work and the work environment, you probably are a joint employer of those workers.

You may not escape joint employment liability under this new-old standard, but you should have a bit more clarity from it than you did from the Browning-Ferris standard.

Well, that’s all I’ve got for now. Happy Holidays to all of you, whether you just finished celebrating one, or you are about to do so! See you next week.

Good news!  If you missed the live presentation, you can now get the recording of my webinar “Navigating the Employee Leave Overlap: FMLA, ADA and Workers’ Comp)”.

Click on the title above for more info.

Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.