The National Labor Relations Board Issues Decision Redefining Joint-Employers

On August 27, 2015, the National Labor Relations Board issued its decision in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186, which significantly broadened the definition of "joint employer". Under the more expansive standard, "two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law [i.e., they both exert sufficient control over, or right to control, the workforce, all factors considered]; and (2) they share or co-determine those matters governing the essential terms and conditions of employment."

This new definition will likely result in the Board finding joint-employer relationships in cases where the previous standard of direct and immediate control over conditions applied. It will also have a far-reaching impact by expanding the sources of liability under the National Labor Relations Act for unfair labor practice, union organizing and possibly at the bargaining table with unions. Prior to this ruling, a company had to have direct and immediate control of the terms and conditions of the employee(s).

The justification by the board was that it did not "best serve the National Labor Relations Act of encouraging the practice and procedure of collective bargaining." According to a release issued by the Board with the decision, "with more than 2.87 million of the nation's workers employed through temporary agencies in August 2014, the Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances."

Companies that use contract employees, staffing agencies and franchises are most likely to see an immediate impact. Companies that have a parent-subsidiary relationship could now have this standard applied as well. Companies that use contract employees, have vendors or suppliers, use staffing agencies, are franchisors, or subsidiaries should consider reviewing contracts and agreements to determine the level of direct and indirect control they have over another company's employees.