On September 14, 2018, the National Labor Relations Board (NLRB) published a Notice of Proposed Rulemaking aiming to clarify the joint-employer standard and, as discussed in the NLRB’s September 13th announcement, “foster predictability, consistency and sustainability in the determination of joint-employer status.” The Proposed Rulemaking would put an end to the dizzying twists and turns of recent decisions on the standard for determining when two businesses are joint-employers.
The rollercoaster ride of joint-employer decisions began three years ago when the Board broke with 30 years of joint-employer precedent by issuing its decision in Browning-Ferris Industries of California d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015), announcing that joint-employer status no longer required direct and immediate control over the terms and conditions of employment. This new lower joint-employer standard set forth in Browning-Ferris requires a case-by-case analysis to determine whether a business possessed actual or potential authority to exercise control over another entity’s employees, regardless of whether the purported joint-employer ever actually exercised such authority.
In December 2017, a new Board reversed the Browning-Ferris decision via its decision in Hy-Brand Industrial Contractors, Ltd. And Brandt Construction Co., 365 NLRB No. 156 (2017), restoring the previous higher standard for joint-employer status. However, the Board ultimately vacated the Hy-Brand decision in February 2018 after one Board member was involuntarily recused from the matter, leaving no majority to overrule Browning-Ferris.
Under the new proposed rule, an employer may be considered a joint-employer of a separate business’s employees “only if the two employers share or codetermine the employee’s essential terms and conditions of employment” (e.g., hiring firing, discipline, supervision, and direction) in a manner “that is not limited and routine.” In short, a business must possess and actually exercise “substantial direction and immediate control over” the essential terms and conditions of employment of another entity’s employees in order to give rise to a joint-employer relationship.
As summarized in the Board’s September 13 announcement, “[t]he proposed rule reflects the Board majority’s initial view, subject to potential revision in response to public comments, that the National Labor Relations Act’s intent is best supported by a joint-employer doctrine that does not draw third parties, who have not played an active role in deciding wage, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another’s employees.”
Currently, if a joint-employer relationship is established, wage and hour liability could extend to both businesses even if one is not responsible for the payment of wages to the employees. In other words, the proposed rule, if adopted, would make it less likely for businesses to be deemed joint-employers under the NLRA, which is good news for businesses.
The 60-day period for public comments on the proposed rule is currently in effect. Comments may be submitted either electronically to www.regulations.gov, or by mail or hand-delivery to Roxanne Rothschild, Deputy Executive Secretary, National Labor Relations Board, 1015 Half Street S.E., Washington, D.C. 20570-0001. FordHarrison will continue to monitor this developing issue. If you have any questions about this, or any other labor and employment issues, please do not hesitate to contact us.