On September 14, 2018, the National Labor Relations Board (“NLRB”) announced its newly rewritten joint-employer standard. The newly proposed language would help to clarify and narrow the current definition of joint-employer, much to the relief of employers. The reversal of the 2015 joint-employer rule and the decision to rewrite the standard comes after President Trump’s appointment of new members to the NLRB shortly after his election.
For companies, the existence of a joint-employer relationship exposes the employer to potential liability for the other employer’s labor violations. Joint-employer relationships affect companies with corporate affiliates (e.g., subsidiaries), franchise and staffing companies, as well as companies using subcontractors.
The 2015 NLRB Joint-Employer Definition
On August 27, 2015, the NLRB redefined its standard for determining what constitutes joint-employer status. The decision to do so came after a dispute involving Browning-Ferris Industries of California (“BFI”), a waste management company, and Leadpoint, a company which provided BFI with employees. Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015). The majority found that BFI was a joint-employer with Leadpoint for purposes of the National Labor Relations Act (“NLRA”).
This decision was unprecedented and established a new standard by which joint-employers were to be defined. Previously, to establish a joint-employer relationship an employer had to exercise direct and immediate control over another company’s workforce. In making its decision, the Board pointed to the direct and indirect control of terms and conditions that BFI held over Leadpoint employees. Under this new standard, a joint-employer relationship could be established by one employer exercising indirect control over essential terms and conditions of employment.
The broad joint-employer definition in 2015 created great uncertainty and anxiety for businesses across the nation. The majority claimed that the refined standard was created in an effort “… to better effectuate the purposes of the Act in the current economic landscape.” The NLRB insisted that the joint-employer standard which had been in effect for decades prior had failed to keep up with the significant changes that had occurred in the workplace.
The Newly Proposed NLRB Joint-Employer Definition
Keeping a promise made earlier this year, the NLRB has announced a proposed change to the joint-employer standard. This move aims to end the Obama-era interpretation and to re-establish the joint-employer standard that was previously in place for several decades leading up until 2015.
The newly proposed language provides that, “[a]n employer, as defined by Section 2(2) of the National Labor Relations Act (the Act), may be considered a joint employer of a separate employer’s employees only if the two employers 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 language greatly narrows the joint-employer definition, and acts to clarify the previous definition, which has been referred to by the International Franchise Association as a “…vague and uncertain legal minefield….” While the NLRB’s newly defined standard is currently only a proposition, the Board intends to officially adopt it later this year, pending public response.
Moving forward, corporate conglomerates, franchises, staffing firms, and companies using subcontractors can rest easier knowing their potential exposure for labor violations of third parties will be lessened.
The NLRB has encouraged the public to submit feedback on the proposed joint-employer definition. Comments can be submitted at www.regulations.gov.
For more information about the newly proposed NLRB joint-employer standard and its implications for Minnesota employers, franchisors, franchisees, staffing firms, and subcontractors, contact one of the Minnesota employment law attorneys of Trepanier MacGillis Battina P.A.
About the Author:
Minnesota employment law attorney Craig W. Trepanier advises clients and handles litigation in a broad range of employment law matters, including employment contracts, employee handbooks, discrimination and harassment, unpaid wages and commissions, discipline and discharge, wrongful termination, employee misclassification, and joint-employer disputes. Craig may be reached at 612.455.0502 or firstname.lastname@example.org. Trepanier MacGillis Battina P.A. is a Minnesota employment law firm located in Minneapolis, Minnesota.