Browning-Ferris redefines joint-employer relationship

The recent decision in the Browning-Ferris case revised the prior definition of the Joint-Employer relationship. The impact could be significant on businesses of all shapes and sizes.

Entities are generally considered joint-employers if they share or co-determine those matters governing essential terms and conditions of employment (Carrier Corp. v. NLRB, 768 F. 2d 778, 781 [6th Cir. 1985]). To determine whether an entity is a plaintiff's joint employer, one must look to the entity's ability to hire, fire or discipline employees, affect their compensation and benefits, and direct and supervise their performance. Generally speaking, if the overall impression is one of control over the aforementioned factors, a joint-employer relationship tends to exist.            

Until recently, an entity was required to demonstrate actual and direct control over workers to in order for a joint employment relationship to be established. However, the Browning-Ferris decision re-defined the requirements in a controversial decision. Browning-Ferris involved a dispute over whether an entity and a staffing agency it utilized were considered joint-employers of the employees provided to the entity through the staffing agency. The entity argued the relationship did not exist because they (1) did not actually exercise any control over the staffing agency's employees and (2) the staffing agency has the sole authority to hire, fire, discipline, supervise, direct, train and schedule its employees. The National Labor Relations Board found in favor of the employee union, holding that the entity and the staffing agency were considered joint employers as the entity either directly or indirectly controlled the essential terms and conditions of employment for the staffing agency's employees.1

This holding essentially provides that a company will be considered a joint employer if it exercises indirect control over working conditions or even if it has merely reserved authority to do so, i.e. in a contract with a staffing agency. In other words, the mere right to control could lead to a joint employment relationship. Indications of "indirect control" would include factors such as: setting and policing employee work schedules, tracking wage reviews, tracking time needed for employees to fill customer orders, acceptance of employment applications through company systems, reimbursement of wages, retention of right to approve employees, requiring the company and its employees to follow safety rules, and making recommendations during the collective bargaining process or retaining the right to provide such input.2            

This decision will likely prove to be favorable from an employee perspective, particularly for those who are considered temporary and/or leased employees. Not only will these employees be able to recover from the client company for their and even the staffing agency's employment indiscretions, but it will likely be a boon to labor unions who are looking to make organizational gains. Specifically, it will subject entities to unprecedented and new joint-bargaining obligations they do not know they have as well as create potential joint liability on both the parent company and the staffing agency for unfair labor practices and breaches of collective-bargaining agreements.3

While this decision will serve to create more labor rights for the employee, for the employers, particularly franchisors, this now means potential exposure for the deeper-pocketed franchisor as opposed to the local operators. From a small business perspective, this new ruling could affect their decision to grow business due to the economic and regulatory strains the new definition places on them as they could now be subject to national labor disputes. Furthermore, if these small businesses are franchised, the individual franchisees could lose their autonomy since franchisors are now likely to be considered joint employers with them.4

Joshua Ferguson and Courtney Mazzio are attorneys with Kent/McBride, 1617 JFK Blvd., Suite 1200, Philadelphia, PA 19103;  they can be reached at Jferguson@kentmcbride.com or Cmazzio@kentmcbride.com. Josh Ferguson will present "How to Avoid Lawsuits...And What to Do if You Can't" on Friday, Jan. 29, at National Pavement Expo in Charlotte, NC. For details visit www.nationalpavementexpo.com.

 

 [1]See Amicus Brief of General Counsel in Browning-Ferris Industries of California, Inc., et al. & Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, Case 32-RC-109684 (NLRB 2015); and http://www.laboremploymentlawblog.com/2015/09/articles/independent-contractors/nlrb-broadens-its-test-for-determining-joint-employer-status/

[2] See id.; and see also http://www.skadden.com/insights/possible-expansion-joint-employer-status-would-impact-businesses-contracted-workers

[3]See id.; and see also http://nrn.com/government/broader-joint-employer-standard-upheld-nlrb?page=2

[4]See id.

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