“Uncertainty” has been the buzzword concerning the most recent decisions from the National Labor Relations Board (NLRB), as new developments and certain conflicts have shifted the board’s stance on critical labor and employment issues. The most recent shift is the board’s reversal of its position on the Joint Employer Doctrine, which establishes criteria used to define who is considered an “employer” in workplaces where more than one organization influence the essential terms and conditions of employment, and determines which employer is responsible under the law. Joint employment comes into play most frequently with franchise operators, staffing agencies, or companies that employ temporary workers or subcontractors. Ultimately, this change means employers should exercise caution in how they structure contracts with such organizations so to protect themselves against any and all potential liability.
In February, the NLRB vacated a decision made in December 2017 in the case of Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., which would have overturned three years of precedent established by the 2015 Browning-Ferris Industries case. As such, the Browning-Ferris standard for determining who is considered a joint employer stands… once again.
What this means for employers:
- How much control do you have? Under the Browning-Ferris standard, the NLRB only requires “indirect control” or “significant control” over the essential terms of employment to qualify a company as a joint employer, even if they don’t actually exercise that control. The standard before Browning-Ferris – which would have been restored if the Hy-Brand decision held – defined a joint employer as one that has “direct and immediate control” over the terms and conditions of employment and exercises that control.
- No appeals available in Hy-Brand, but appeals underway in Browning-Ferris. Appeals are no longer available in the Hy-Brand case, meaning that the Browning-Ferris standard will continue to govern until another case comes before the NLRB to challenge this precedent. However, the Browning-Ferris case is still up for appeal, leaving the possibility that it would be overturned.
- A potential legislative fix? In November 2017, the U.S. House of Representatives passed the Save Local Businesses Act, which would redefine a joint employer under the National Labor Relations Act and the Fair Labor Standards Act as one that “directly, actually and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment.” That measure is still being considered by the U.S. Senate.
Until there’s clarity on this issue, it is best for employers to review their contracts with staffing agencies, subcontractors, or franchisers to ensure that the contracts adequately protect your interests, and implement any necessary human resources changes to avoid liability. If you do use temporary employees, always ensure that, in practice, you don’t have control over the temporary employee’s essential terms of employment and day-to-day activity.
Finally, it is important to note that the “joint employer” status does not last indefinitely, and you can change your business practices to adjust your status.