Proposed rule on joint employers would be more powerful than board decision
The National Labor Relations Board is looking to restore its traditional joint employer standard — and with a method that might make it last.
On Sept. 14, the NLRB proposed a rule that would undo its Obama-era decision in Browning-Ferris Industries, which expanded its definition of joint employers. Under the rule, the NLRB would once again find an entity to be a co-employer of another’s workers if it actually exerts control over the hiring, firing, discipline and other “essential terms and conditions” of their employment. The reinstated joint employer standard, if finalized, would be difficult to undo in the future, providing more predictability for employers on a legal issue that’s spent years in flux.
The proposed rule contains some extra verbiage that appears to narrow the joint employer definition even further than the pre-Browning Ferris era. If finalized, the rule could lead other federal agencies to tighten their joint employer interpretations in kind, going beyond just the NLRB and labor relations issues.
In 2015, the NLRB under President Barack Obama broadened the definition of joint employers for the purpose of determining liability in labor issues. In the landmark Browning-Ferris decision, the board held that an entity could be a joint employer of another entity’s workforce if it merely reserved the right to control the essential terms and conditions of those workers’ employment. But contrary to the NLRB’s pre-Browning-Ferris standard, the employer wouldn’t have to actually exercise that right to control to be deemed a joint employer — and therefore on the hook for unfair labor charges and collective bargaining that the other entity’s workers bring.
For franchisors, as well as employers that hired independent contractors and staffing agencies, Browning-Ferris exposed them to a world of liability. In what is perhaps the most massive example of post-Browning-Ferris litigation, the NLRB issued unfair labor practice charges against McDonalds that previouslsy would have been limited to just its franchisees in six different cities. The fast food giant and the NLRB reached a settlement in March, but the administrative law judge rejected it in June, citing “conflicting statements” made by McDonalds in the negotiations.
Mark Nelson, vice chair of Polsinelli’s traditional labor relations practice in Denver, said that joint employer issues are also a big deal in the construction industry. General contractors often establish the work conditions of the site for subcontractors, including when they must show up and where to park.