NLRB Browning-Ferris Joint Employer Decision Overturned - American Society of Employers - Michael Burns

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NLRB Browning-Ferris Joint Employer Decision Overturned

One of the most controversial decisions of the Obama era National Labor Relations Board (NLRB) was its 2015 decision finding Browning-Ferris who used subcontracted workers (not their direct employees) was in fact a joint employer with its contractors.

To put a sharper point on it, the customer’s employees became the customers. Like a dam break this decision seemed to flood outwards and into other federal regulatory agencies causing extensive review and re-determination of what franchise, contract, and vendor relationships actually were for employment purposes.

The original Browning-Ferris decision found the company was a joint employer of one of its contractors and was therefore obligated to bargain with their vendor and the union organizing the employee over terms and conditions of employment.  The 2015 NLRB ruling upset 30 years of agency decision precedent. It should have had a limited impact to just the labor relations arena. Unfortunately, it did not.

Other federal agencies from the IRS to the Department of Labor to the Equal Employment Opportunity Commission all moved toward this new position.  All started seeing that parent organizations, regardless of how they were legally structured, may have additional employer responsibilities for other organizations that were horizontally and/or vertically aligned to it.

Horizontal employment relationships are typically exemplified by two different restaurants (franchises) owned by one parent company. The employees of one would be considered employees of the other regardless of being two separate corporations with two tax ID numbers. Vertical employment relationships are typically exemplified by one company hiring another company to do certain work within it.

Most concerning was the federal government’s subsequent attack on the decades old corporate franchisor-franchisee relationship.

The NLRB had first reversed itself on Browning-Ferris back in 2018 with its Hy-Brand decision. Unfortunately, that decision was vacated due to a board member’s ethical conduct concern.

In February 2020, the current NLRB published a final rule updating its joint-employer standard. The new standard articulates that an employer may only be considered a joint employer of a separate employer's employees if it possesses and exercises substantial direct and immediate control over the employees' essential terms of employment.

Does this settle the broader changes instituted by other regulatory agencies and the courts? No, though it has put the brakes on the concept’s implementation momentum.

The federal Department of Labor issued standards in 2016 for joint employment as it would apply to Fair Labor Standards Act (FLSA) issues. These regulations were rescinded about a year and half later in 2017. The Courts are still looking at what joint employment is under the FLSA.

The EEOC continues to look at whether joint employment is present when addressing anti-discrimination and uses 14 criteria to weigh what level of control one party has over the other.

The federal legislature has taken a run at codifying what joint employment is but so far none of the bills have been passed.  Most activity is limited to the Democratically controlled House of Representatives.

Coming back to the recent new Browning-Ferris decision and its limited scope, the NLRB amended union election results and removed Browning-Ferris for its status as a joint employer with its old vendor called Leadpoint.

The upcoming election has some real ramifications should the Democratic party win the White House and also gain a majority in the Senate. Expanding joint employment criteria to break down the franchise relationship and as well as the much of the “curtain” between contractor and sub-contractor/customer and vendor could be more firmly established by law rather than the more malleable regulations and agency rulings used so far.

 

Sources: Lexology Jackson Lewis OSHA Blog NLRB Browning Ferris Unjustly Found a Joint Employer 8/2/2020.

HR Dive NLRB Overturns Browning-Ferris, says company is not a joint employer.

Franchising: Joint Employer and General Labour and Employment Issues Barnes & Thornburg LLP 7/31/2020


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