NLRB Moving Forward After False Start in Changing Joint-Employer Standard

From the moment the National Labor Relations Board handed down its joint-employer ruling in the 2015 Browning-Ferris case, it was considered controversial by many labor law practitioners. The decision was so controversial that it was immediately challenged and is still on appeal in the federal court system. 

After President Donald Trump was given the opportunity to reshape the makeup of the board in 2017, the Browning-Ferris standard was reversed in a new decision, Hy-Brand Indus. Contractors Ltd.

However, the board rescinded Hy-Brand a few months later after an ethics investigation determined that one of the new board members, William Emanuel, shouldn’t have participated in the decision because of his previous ties to the employers in the Browning-Ferris case.

As a result, the board’s joint-employer standard has technically reverted to the one set out in Browning-Ferris, though the Hy-Brand standard is expected to be adopted through the rulemaking process. 

Browning-Ferris Criticized by Many

Many people criticized the Browning-Ferris standard for being overly broad, as it doesn’t require direct and immediate control over terms and conditions of employment, but rather permits a finding of joint-employer status based on theoretical and indirect control. This means that even the potential to affect terms and conditions of employment, whether exercised or not, will permit a joint-employer finding.

Louis DiLorenzo, a managing member and chair of the Labor & Employment, Employee Benefits & Immigration Practice Group at Bond, Schoneck & King in New York City, says that the Browning-Ferris standard is a logistical nightmare for collective bargaining purposes.

“To negotiate with an entity with theoretical or unexercised control is a waste of time and recipe for disaster in collective bargaining and any contract that could result,” DiLorenzo said. “Bargaining is difficult enough without adding a third party who has theoretical but not immediate and direct control over terms and conditions of employment. Imagine a joint employer with an unknown agenda, not the real employer, having a place at the bargaining table.”

DiLorenzo said the use of rulemaking to define the board’s joint-employer standard and establish procedures for dealing with joint-employer allegations in both representation and complaint cases would allow for efficiency and provide stability through consistent and predictable results. 

Hy-Brand Establishes ‘Bright Line’ on Control

He also said the standard set forth in Hy-Brand would yield fairer, more realistic determinations with regard to joint-employer status. 

More specifically, he said a requirement of immediate and direct control is a practical result so as to make bargaining meaningful. Having such a “bright line” enables employers to assess the possibility of joint-employer status when they enter into relationships with subcontractors, suppliers, and vendors.

In contrast, it would make no sense to require “involvement and participation in bargaining with an entity that has only theoretical, indirect, and unexercised control over terms and conditions of employment,” DiLorenzo said. “Bargaining needs to be conducted with real employers, those with real control, real skin in the game, and the real power to make decisions concerning bargaining demands that affect terms and conditions of employment.”

What Constitutes ‘Immediate and Direct’ Control?

Under the Hy-Brand standard, an employer needs to have “immediate and direct” control over “essential” terms and conditions of employment in order to be considered a potential joint employer. According to DiLorenzo, this makes collective bargaining negotiations easier and more efficient, and there are very few settings where employees don’t know who controls their work.

“There is nothing theoretical about collective bargaining negotiations or collective bargaining agreements,” DiLorenzo added. “If a group of employees is going to bargain collectively over the typical issues you see in a collective bargaining agreement’s table of contents, it is important that they are negotiating these items with the employer that actually makes those decisions.”

In those rare cases where there is an actual sharing of direct and immediate control over employees (for example, one employee controls wages, and another controls and directs the employees’ work activities), there could be multiple parties involved in bargaining. “In those cases, there would need to be a real division of the terms and conditions of employment for bargaining with each employer,” DiLorenzo said.

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