Legal Alerts

28 Aug 2015

Not a joint-employer? You might be now, thanks to the NLRB

The National Labor Relations Board (“Board”) has rewritten a decades-old definition of not a joint-employer in its Browning-Ferris decision issued Thursday. In a 3-2 decision, the Board majority declared that it was simply restating the test for joint-employers, but that could not be further from reality.

Traditionally, a company would be considered a “joint-employer” if it had direct and immediate control over the terms and conditions of employment. The test required that direct control was actually exercised; not simply available in the abstract. Under the Board’s new definition, a company may be considered a “joint-employer” if it exercises indirect control over the terms and conditions of employment or if it reserves the right to do so.

The troubling fact is that the Board did not explain how much indirect control is necessary to create the joint-employer relationship. Unions and employees of franchises, such as McDonald’s and other fast food restaurants, now have the hope of reaching a bigger purse: corporate headquarters. With “Fight for 15” demonstrations taking off across the country, it would not come as a surprise to see labor unions actively try to organize franchise employees and knock on corporate headquarters’ door when it comes time for bargaining.

Companies who once thought they had an arms-length relationship with contractors and their employees may now find themselves responsible for those contracted employees in the eyes of the Board. Holding companies and other corporate parents may now find themselves immersed in labor relations disputes which previously would have only targeted their subsidiaries or affiliates. Given the Board’s broad view of what constitutes “indirect control” over the terms and conditions of employment, employers presently utilizing contracted labor and/or temporary labor services would be well advised to consult with counsel to address the terms of such arrangements to ensure the desired degree of separation with respect to labor relations is maintained by both the employer and the contractor.

If you have any questions about joint-employer liability or any other labor matter, please do not hesitate to contact Lowenbaum Law’s Labor Department.