NLRB Redefines Joint-Employer Standard

In a 3-2 decision last week, the National Labor Relations Board (NLRB) issued a decision in its case against Browning-Ferris Industries (BFI) that redefines and expands "joint employer” liability under the National Labor Relations Act, making it easier for two or more companies to be declared joint employers.

In the controversial decision, the NLRB found that BFI was a joint employer with Leadpoint, the company that supplied employees to BFI to perform various work functions, including cleaning and sorting of recycled products. In finding that BFI was a joint employer with Leadpoint, the Board expanded the long held “direct control” standard to include indirect control that BFI possessed over essential terms and employment conditions of the employees supplied by Leadpoint. Under prior NLRB doctrine, to be named a "joint employer" a company had to both possess the authority to dictate employee actions, and exercise that authority. Under the NLRB's new standard, simply possessing the authority to dictate employee actions can lead to joint employer status, even if that authority is not actually exercised.

Broadening this standard now will expose companies to more legal liability for how their subcontractors, staffing agencies and franchisees treat their employees. The ruling also makes businesses more susceptible to workforce unionization by imposing new collective bargaining obligations and allowing unions the ability to strike or picket a large entity compared to the individual location where there is a dispute.

The NLRB’s actions, along with the Department of Labor and its recently released proposed changes to overtime rules, leave little doubt that the Obama Administration intends to continue implementing policies designed to regulate how employers manage their employees. It is imperative that NATSO members and our allies continue voicing our concerns with these recent efforts, and emphasize that such efforts can lead to unintended consequences that ultimately harm the very workers that the policies are designed to protect.

In anticipation of the NLRB decision and in direct response to ongoing regulatory overreach by the NLRB, a group of local business owners and associations earlier this year launched the Coalition to Save Local Businesses (CSLB) of which NATSO is a member, to advocate for the previous joint employer standard. The CSLB has spent months informing Members of Congress about the devastating impact that redefining the joint employer standard would have on businesses and the overall U.S. economy.

The coalition soon will ask Members of Congress to support legislation that would codify the decades-long and widely-accepted definition of what constitutes a joint employer. Sen. Lamar Alexander (R-Tenn.) already has stated that he intends to introduce this legislation in the U.S. Senate, and NATSO expects a U.S. House companion bill to be introduced as well.