NLRB Revises and Expands Standard for Joint-Employer

In a recent decision entitled Brown-Ferris Industries of California, Inc., et al., Case No. 32-RC-109684, published August 27, 2015, the National Labor Relations Board (NLRB) redefined the standard for determining joint-employer status. Finding that the prior standard failed to keep pace with changes in the workplace and economic circumstances, the Board ruled it would require only that a joint employer possess the authority to control an employees’ terms and conditions, and not actually exercise that authority, to be found a joint employer.

The Board noted that as of August 2014, 2.87 million people were employed through temporary help services. After analyzing the data regarding this growing segment of the national workforce and an evolution of the joint-employer standard that had narrowed over time, the Board concluded a clearly defined standard was necessary to adapt the National Labor Relations Act to the complexities of industrial life. In its decision, the Board found that Brown-Ferris Industries (BFI) was a joint employer with Leadpoint, the company that supplied employees to BFI to perform various work functions for BFI, including cleaning and sorting of recycled products. In finding that BFI was a joint employer with Leadpoint, the Board relied on indirect and direct control that BFI possessed over essential terms and conditions of employment of the employees supplied by Leadpoint as well as the fact BFI reserved authority to control such terms and conditions.

Going forward, the test for determining whether a party is a joint-employer will be whether (1) both entities are employers within the meaning of the common law; and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will – among other factors – consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.

This decision reflects a departure from authorities that had gradually narrowed the standard for determining joint-employer status. It reflects not only a more expansive view of who might be properly characterized as a joint-employer, but also shows the NLRB is willing to revise its standards based on workforce data and emerging trends in the national workforce.

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September 2, 2015