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NLRB Expands Joint-Employer Standard Impacting Contractor/Subcontractor Relationships

unionOn August 27, the National Labor Relations Board (NLRB) issued its decision in Browning-Ferris Industries, vastly expanding the standard for determining when two separate entities are considered “joint employers” of a group of employees under the National Labor Relations Act (NLRA). The 3-2 decision ruled that the waste recycling company Browning-Ferris Industries (BFI) is a “joint employer” with the staffing firm it hired, Leadpoint Business Services, to run one of its recycling plants, and required BFI to negotiate with the Teamsters union at that facility. The decision may have broad repercussions on any employer that uses subcontractors or vendors for services.

The decision, which marks the end of a busy month for the NLRB, redefines and expands a long-established standard for “joint employer” liability under the NLRA. Under the joint employer doctrine, one employer may be found liable for another employer’s unfair labor practices and/or violations of collective bargaining agreements. Previously, two separate entities were only found to have a “joint-employer” relationship if one exerted “direct and immediate” control over the other’s workers to the extent that they “share or codetermine those matters governing the essential terms and conditions of employment.” Despite concerns expressed through various amicus briefs and congressional hearings (including two hearings that were held in the final hours ahead of the decision being released) that changes to the 30-year-old standard would have a negative impact on the employer community, the board largely adopted the recommendation in NLRB general counsel Richard Griffin’s brief urging them to expand the definition of joint employment under the NLRA. Now, as a result of the ruling, it is only necessary for an entity to exercise “indirect” control, or even the “unexercised potential” of control, over another entity’s employees to establish a joint-employer relationship.

The potentially widespread reach of this ruling to any employer that uses a subcontractor, vendor or temporary agency was met with a strong 28-page dissent by Republican Board members Philip Miscimarra and Harry Johnson. Their dissent highlighted the controversial nature of the ruling. Specifically, they found the ruling to be contrary to congressional intent in that it will “subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential liability for unfair labor practices and breaches of collective bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts and picketing.” Furthermore, as the dissent highlights in more practical terms, the ruling “is impermissibly vague and overbroad and will have substantial adverse consequences” to employers, contractors and employees alike.

Capitol Hill has taken note of the ruling and the potential consequences it may have for employers and employees. Sen. Lamar Alexander, chairman of the Senate Committee on Health, Education, Labor, and Pensions, and Rep. John Kline, chairman of the House Committee on Education and the Workforce introduced the bicameral (S. 2015 and H.R. 3459) Protecting Local Business Opportunity Act to roll back the NLRB ruling and replace it with the previous decades-long joint-employer standard. The Senate’s bill already has the support of 35 lawmakers with the House bill carrying the support of another 27 lawmakers, further highlighting the importance of the NLRB’s decision.

 

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