NLRB Proposes Rule Changing Joint-Employer Standard

By Anthony J. Amendola

Recently, the National Labor Relations Board (NLRB) published its “Notice of Proposed Rulemaking; request for comments” in the Federal Register setting forth a proposed new standard for establishing a joint-employer relationship.  The joint-employer analysis is significant because entities found to be joint employers may be jointly liable for alleged unfair labor practices or under collective bargaining agreements.  In various circumstances, parent/subsidiary companies, franchisers/franchisees and client/temporary services providers have been argued to be joint employers.

The proposed rule states that two entities may be considered joint-employers only if they share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction.   A putative joint-employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.

This new rule, if adopted, will restore the NLRB’s traditional standard for determining joint-employer status under the National Labor Relations Act (NLRA) by reversing the NLRB’s decision in Browning-Ferris, 362 NLRB No. 186 (Aug. 27, 2015).  Under the Browning-Ferris standard, two or more employers are considered joint-employers if they share or codetermine matters governing the essential terms and conditions of employment.  This inquiry focuses on whether the alleged joint-employer has the potential to control aspects of the workplace, either directly or indirectly, regardless of whether the employer ever exercises that authority.

Late last year, in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017), the NLRB attempted to reverse the Browning-Ferris joint-employer standard, but the NLRB later reversed and vacated Hy-Brand (in February 2018) due to Board Member William Emanuel’s participation in the decision.  (Prior to joining the NLRB, Member Emanuel was a partner at the law firm that had represented one of the unsuccessful parties in Browning-Ferris.)

The NLRB’s Notice of Proposed Rulemaking provides a detailed history of the development of the joint-employer test under the NLRA.  It also contains a detailed statement of the NLRB’s reasons for proposing its joint-employer rule and a dissent drafted by Member Lauren McFerran, who was in the majority in Browning-Ferris and in the dissent in Hy-Brand.  Comments regarding this proposed rule must be received by the NLRB on or before November 13, 2018.  Comments replying to comments submitted during the initial comment period must be received by the NLRB on or before November 20, 2018.

 

 

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