NLRB’s Proposed Rule for Joint Employer Relationships

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By:  Claudia D. Orr

The National Labor Relations Board (“the Board”) is comprised of five members, appointed by the president, who serve for five years.  One member’s term expires each year. As the composition of the Board changes, so do some of its positions.  The Board’s position on “joint employers” has changed again, and this time employers can celebrate.

The concept of joint employers is important under the National Labor Relations Act (“NLRA”) and has real consequence to employers. In 2015, a divided Board in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), overruled long time precedent making it significantly easier to find a joint employment relationship. A petition for review was filed and, in December 2017, a new Board majority restored the prior more stringent standard.  But, this change was short lived. In February 2018, that decision was vacated, reverting back to the more relaxed standard for imposing a joint employment relationship. Currently, there is an appeal pending before the US Court of Appeals for the District of Columbia Circuit, challenging the Board’s authority in adopting the easier standard.

This makes a girl’s head spin.  But the dance is not over.  The Board now proposes to adopt the more stringent standard through rulemaking and issued its Notice of Proposed Rulemaking and Request for Comments concerning the Standard for Determining Joint-Employer Status on September 14, 2018.  

So what are the two standards?  Under the more stringent, traditional standard, there must be evidence that the putative joint employer actually exercised ‘“direct and immediate’ control over the essential working conditions of another company’s workers.” Under the Browning-Ferris majority’s relaxed standard, “a company could be deemed a joint employer even if its ‘control’ over the essential working conditions of another business’s employees was indirect, limited and routine, or contractually reserved but never exercised.”

Why does it matter?  When a joint-employer relationship is found, the Board can compel the putative “joint employer” to engage in good faith bargaining with the union that represents the employees who work for the other employer.  Also, both employers can be found jointly and severally liable for unfair labor practices regardless of who committed the act. Additionally, picketing may occur lawfully at the putative joint employer (whereas if it was not so deemed, the picketing would be unlawful). In short, which standard applies will matter to your company if it, although a non-union employer, is deemed a joint employer with all of the obligations of a union shop and the liabilities for the unfair labor practices of its joint employer.

After 27 pages of background and miscellaneous information, the Board’s notice sets out the new proposed rule as follows:

An employer, as defined by Section 2(2) of the National Labor Relations Act (the Act), may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction.  A putative joint employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.

Following the proposed rule are a dozen examples which include situations where employers hire contractors via business contracts, employers use temporary staffing agencies, companies supply line workers to manufacturers, franchisors and franchisees relationships etc. Comments on the proposed rule may be submitted to the Board on or before November 13, 2018.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association.  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.   

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