The NLRB’S Ever Changing Joint Employer Rule

It is not easy these days trying to figure out what test the NLRB will utilize in determining whether one company is a “joint employer” of another.   On February 26, 2018, the NLRB vacated its decision in Hy-Brand Industrial Contractors, Ltd, decided just a few months earlier in December 2017, and restored the more expansive joint employer test announced in 2015 in Browning-Ferris Industries, which Hy-Brand had overruled.  Under Browning-Ferris, one company can be considered a joint employer of another if it just possesses “indirect control” or  “reserved authority” over the workers, even if it never exercised such control or authority.

For those keeping score of how we got to this point, here we go:

In 1984, the NLRB decided two cases, TLI, Inc., 271 NLRB 798, and Laerco Transportation, 269 NLRB 324, where it held that a business is considered a joint employer of another only if it actually exercised direct control over “essential employment terms.”  This was the test for almost thirty years.

In 2015, the NLRB, with a majority of its members nominated by President Obama, reversed this long standing precedent with its decision in Browning-Ferris. In that case, the NLRB announced a new and substantially broader test which focuses not on direct control, but instead on whether the putative joint employer possesses the authority, even indirectly, to control terms and conditions of employment regardless if it exercised such authority. The ruling was a seismic shift in labor relations because now, based on just possession or reservation of indirect control, one company can be liable for the labor violations of another company based on the broader joint employer test. It greatly expanded the reach of the National Labor Relations Act to temporary staffing arrangements, franchisees, and other alternative work arrangements. In fact, this was an express policy rationale provided by the NLRB in reversing almost thirty years of precedent, namely, to reach what it described as the “much wider range of occupations” which have significantly expanded in the temporary employment industry.

By December 2017, with a new NLRB in place under President Trump, the NLRB reverses Browning-Ferris with its Hy-Brand decision and reverts back to the direct control test.  Employers breathe a sigh of relief that all is right in the world again.  The celebration is short-lived, however, because by the end of February 2018, the NLRB vacates its Hy-Brand decision. Why? The NLRB’s Inspector General (in essence its ethics official) concludes that one of the NLRB members who decided Hy-Brand should not have participated in that decision because his former law firm represented one of the parties in the Browning-Ferris case. So, we are now back to the expansive, indirect control test for finding a joint employer relationship. At least for the moment.

For more information, or if you have any questions regarding this blog, you may contact Archer attorney Douglas Diaz, Esquire at ddiaz@archerlaw.com or one of Archer’s other experienced labor and employment law attorneys at (856) 795-2121.