All observers recognized that the National Labor Relations Board’s Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015) decision, overhauling decades of settled precedent, was going to have significant and far-reaching effects, as it greatly expanded the scope of relationships in which the Board would find entities to be “joint employers.” Most commentary has focused on a variety of business relationships swept up into the decision’s reach: franchise arrangements, subcontracting arrangements, subsidiary arrangements, etc. Late last month, however, an amicus filing by Microsoft and the HR Policy Association highlighted yet another possible consequence: the extent to which the new BFI standard might disincentivize corporate adoption of Corporate Social Responsibility (CSR) policies.

CSR refers broadly to efforts by a corporation to promote social values and provide resulting benefits to a variety of stakeholders and the society at large.  One prominent approach adopted by participant companies is a code of obligations and commitments they require of potential suppliers or vendors before contracting to do business with one another.  Microsoft has been recognized repeatedly as the top “corporate citizen” by Corporate Responsibility Magazine. In March of 2015, Microsoft announced, as part of its CSR initiatives, that it would only contract with suppliers that “provide their employees who handle [Microsoft] work with at least 15 days of paid leave each year.

At the time, a small independent union, the Temporary Workers of America, was engaged in a labor dispute with a Microsoft supplier, Lionbridge Technologies over the terms of an initial collective-bargaining agreement for Lionbridge employees it represented. Frustrated by the employer’s offer on the table, the union invited a Microsoft executive to join the bargaining.  When Microsoft declined, citing the BFI decision and the PTO requirement in Microsoft’s CSR policy, the union filed an unfair labor practice charge against Microsoft for failure to bargain in good faith. That case, NLRB Case No. 19-CA-162985, remains pending in the Seattle Regional Office of the Board.

The Browning-Ferris case, on the other hand, is up on appeal before the United States Court of Appeals for the District of Columbia Circuit.  On June 14, 2016, Microsoft and HRPA filed an amicus brief arguing not only that the Board’s BFI decision was deeply flawed, but that it would also:

cause companies to question whether CSR initiatives will contribute to findings of joint employment relationships, and ultimately deter adoption of such initiatives.

If so, the law of unintended consequences could well result in companies declining to institute CSR policies like the Microsoft example at issue here, denying improved terms and conditions of employment to employees throughout the economy.  We will follow both cases and publish updates as developments warrant.

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