NLRB Announces Intent to Change Joint-Employer Test

On Thursday, September 13, 2018, the National Labor Relations Board (NLRB) announced its intent to change the standard to determine joint-employment. In a September 13, 2018, news release, the Board stated that it will publish a proposed rule clarifying and restricting the standard to determine when two entities are considered a single “joint-employer” over a group of employees.  The proposed changes would limit joint-employment to employers that possess and exercise “substantial, direct and immediate control over the essential terms and conditions of employment” of another employer’s employees.  The proposed changes would also require that an employer must have exercised its control over the group of employees in more than a “limited and routine” manner.

The current standard was provided in the Board’s decision on Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015).  The Browning-Ferris standard broadened the joint-employer standard to include employers that possess the right to control another entity’s employees regardless of whether the employer exercised that control.  Under the proposed new standard, “indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.”

The proposed rule comes after a series of recent changes to the joint-employer standard. Just two years after the Browning-Ferris decision, Browning-Ferris was overturned when the Board decided Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017).  In Hy-Brand, the Board rejected the Browning-Ferris standard and returned to the previous standard that joint-employment could only be found where an employer both had the right to and did exercise direct control over another entity’s employees.  In February 2018, the NLRB vacated its decision in Hy-Brand due to ethical reasons related to a Board member’s ties with a law firm that represented one of the entities involved in Browning-Ferris.

The Board stated in the news release that the proposed rule is intended to provide clarity and predictability for employers. The Board provided further support for the changes stating that the “National Labor Relations Act is best supported by a joint-employment doctrine that does not draw third parties, who have not played an active role in deciding wages, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another employer’s employees.”

The proposed rule is expected to be published Friday, September 14, 2018, and will be open for comment for the following 60 days.  John Ring, NLRB Chairman, stated in a Tweet on Thursday, that the Board will consider all views received during the notice and comment period as they develop a final rule.  If you have questions regarding the proposed changes or need assistance to review your employment policies, please contact the LeClairRyan attorney with whom you regularly work.

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