Work it Out Blog

The Far Reaching Impacts of the NLRB's New "Joint Employer" Standard

Sep 15, 2015 by David T. Andrews

The National Labor Relations Board’s recent decision in Browning-Ferris Industries (BFI) will have significant impacts on many employers.  When two employers are “joint employers” they are both responsible for bargaining obligations with recognized unions, both responsible for unfair labor practices and are both subject to picketing or boycotting activity.  In the BFI case, the union already represented BFI’s direct employees who work in their waste processing plant.  The union was attempting to show that BFI and its employee staffing firm were "joint employers" so that the union would be able to bargain for the staffing agency employees who work at BFI’s site as well. 

Under the old standard, in order to be a “joint employer” the Board looked to the extent of the control over the employees.  In order to be seen as a “joint employer” of another company’s employees there had to be direct and immediate control over employees’ terms and conditions of employment.  The control was required to be substantial and actual, not limited or hypothetical.  It had to be real control in practice, not a right to control that was reserved in a contract, but rarely exercised. 

This decision now changes that standard substantially and says that in determining whether there is a “joint employer” relationship the NLRB will look at “the right to control” and will not rely on whether that right to control is actually exercised on a day to day basis.  The BFI case also emphasizes the importance of “indirect control.”  One example of indirect control in the case was that BFI set the shift times so, in the NLRB’s eyes, BFI was controlling the hours of the staffing agency employees even though the staffing agency was completely responsible for scheduling its employees. 

This case was decided in the context of when a staffing agency and a primary employer may be considered “joint employers,” but it has much wider significance.  So, what does this mean for your business?     

Staffing agency relationships

All companies should immediately examine any staffing agency relationships.  If your company gets labor from a staffing company, either on a short-term or long-term basis, you should immediately review that contract and determine whether changes need to be made to ensure that your company’s control of those employees is extremely limited.  If you are a "joint employer" with the staffing agency you are responsible for their unfair labor practices and may be required to recognize any union that infiltrates the staffing agency. 

Parent-subsidiary issues

While the BFI case was decided in the context of a staffing agency relationship, the principles set out in the case apply equally to other settings.  In situations where a company has multiple locations and has union representation at one location, but not another, this decision will make it much easier for the union to expand its influence to the other locations within the group.  For example, if employees are organized at one location, but not at another, you can expect that unions will be examining the interrelationship between the various locations to see if they can make the “joint employer” argument.  Issues that would be examined include:

  1. Actual control over the employees’ wages, benefits, schedules, work hours, production standards, training, policies, and supervision.  Is that all coming from a central corporate location or are they really separate independent entities?; and
  2. What control does the corporate parent or the management company have on paper over these terms and conditions of employment, even if that control is not regularly exercised.

Franchise relationships

While this may be a bit more of a stretch, we will watch carefully to see if the unions attempt to extend the broad language of the BFI decision to the franchisor/franchisee relationship.  For example, if a franchisor retains control or provides direction over the franchisee’s staffing relationship, the union may argue that because of this right of control the franchisor and franchisee are “joint employers.” 

The bottom-line is that the definition of “control” that is necessary for a "joint employer" relationship is much more liberal than it was a few days ago.  There is now additional emphasis on theoretical control that exists in a contract agreement rather than the actual real-world control that exists in the workplace. 

Please call or email David Andrews or your Day Ketterer attorney with any questions at 330.455.0173 or info@dayketterer.com.

The content of this blog is for informational purposes only and is not intended as legal advice for any purpose. This blog is not intended to present an exhaustive summary of all applicable laws, or to take the place of legal advice.  If you have any questions regarding the law, please contact us for assistance.