Today the National Labor Relations Board issued its long-awaited ruling in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015), a 3-2 decision overruling the NLRB’s prior joint-employer standard adopted in 1984. The Board majority, consisting of Chairman Pearce and Members Hirozawa and McFerran, prefaced its need for revisiting the thirty-year-old standard on the fact that “the Board’s view of what constitutes joint employment under the Act has narrowed, [and] the diversity of workplace arrangements in today’s economy has significantly expanded.” By making its joint-employer standard much more encompassing, the Board majority claims that it is:

put[ting] the Board’s joint-employer standard on a clearer and stronger analytical foundation, and within the limits set out by the Act, to best serve the Federal policy of “encouraging the practice and procedure of collective bargaining.”

Under the Board’s new test, it will find that:

two or more statutory employers are joint employers of the same statutory employees if they “share or codetermine those matters governing the essential terms and conditions of employment.” In determining whether a putative joint employer meets this standard, the initial inquiry is whether there is a common-law employment relationship with the employees in question. If this common-law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.

… We will no longer require that  joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. Reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry. … Nor will we require that, to be relevant to the joint-employer inquiry, a statutory employer’s control must be exercised directly and immediately. If otherwise sufficient, control exercised indirectly–such as through an intermediary-may establish joint-employer status.

Examples of “essential terms and conditions of employment” include “hiring, firing, discipline, supervision, and direction”; wages and hours; the number of workers to be supplied; “controlling scheduling, seniority, and overtime; and assigning work and determining the manner and method of work performance.”

If an entity is found to be a joint employer, the Board notes that, “as a rule,” it will only be required to bargain “with respect to such terms and conditions which it possesses the authority to control.”

In a blistering and lengthy dissent, Members Miscimarra and Johnson not only assert that the majority’s decision is inconsistent with the law, but that it will be the opening of Pandora’s box. The logistics of bargaining with multiple employers (and potential competitors); determining which employer controls which terms and conditions; what constitutes secondary strikes, boycotts, and picketing; and joint liability are but a few of the problems described with particularity by the dissent. Moreover, and just as important, is that the majority’s decision provides no basis for parties in a business relationship to insulate themselves from being a joint-employer under the Act. Specifically, the dissent faults the majority’s finding that almost every aspect of a business relationship between two entities “may be probative, but it provides no significant guidance as to what may or should be determinative.”

While the Board majority acknowledges that its decision eliminates “certainty and predictability regarding the identity of the ’employer,'” it emphatically denies that its decision “fundamentally alters the law,” especially with regard to employment relationships under other legal relationships such as parent-subsidiary, contractor-subcontractor, and franchisor-franchisee:

None of those situations are before us today, and we decline the dissent’s implicit invitation to address the facts in every hypothetical situation in which the Board might be called on to make a joint-employer determination. As we have made clear, the common-law test requires us to review, in each case, all of the relevant control factors that are present determining the terms of employment. In this case we are specifically concerned with only two [specific] employers….

The majority’s assertion that its decision does not fundamentally alter the law is peculiar, especially when read with its statement that:

In this area of labor law, as in others, the “nature of the problem, as revealed by unfolding variant situations,” requires “an evolutionary process for its rational response, not a quick, definitive formula as a comprehensive answer.'”

As noted by the dissent, perhaps the Board majority plans on applying a different joint-employer test outside the user-supplier context at issue in Browning-Ferris, which, according to the dissent, “would mark an unprecedented and unwarranted break from the unitary joint-employer test under our Act that has applied to all types of business relationships, each of which is affected by changing the basic joint-employer test.”

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