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The NLRB Joint Employer Ruling
On Aug. 27, the National Labor Relations Board (NLRB) issued Browning-Ferris Industries of California, Inc., 362 NLRB No. 186, a sweeping decision that expands the definition of “joint employer” for purposes of the National Labor Relations Act (NLRA). Abandoning 30 years of precedent that required “direct” and “immediate” control over employees' working conditions for a finding of joint employer status, the NLRB held instead that “indirect” or “potential” control is sufficient. Moreover, no longer does the employer actually have to exercise any control for a finding of joint employer status. Rather, as long as some degree of direct or indirect control is reserved for the putative joint employer in the contract with the labor provider, that alone is sufficient to establish joint employment. In the divided decision, two members of the five-member board issued a sharp dissent, characterizing the new standard as a departure from the common law agency standard applied by the NLRB for decades.
Ambiguity over Certainty
The board's new joint employer standard contains substantial ambiguities, such as which employment terms are “essential,” and the decision raises as many questions as it answers. As stated by the dissent, the majority “abandon[ed] a long-standing test that provided certainty and predictability, and replace[d] it with an ambiguous standard that will impose unprecedented bargaining obligations on multiple entities in a wide variety of business relationships, even if this is based solely on a never-exercised 'right' to exercise 'indirect' control over what a Board majority may later characterize as 'essential' employment terms.”
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