NLRB Revisits Standard for Joint-Employment, Casts Wider Net
September 1, 2015 by Hayley Lewis Folmar, Associate Attorney and Jason C. Taylor, Partner
On August 27, 2015, the National Labor Relations Board ("NLRB" or “the Board”) released its revised joint-employer standard in the BFI Newby Island Recyclery decision, 362 NLRB 186. In doing, so, the NLRB asserted that its effort was to rectify inconsistency with prior rulings. Further, the Board specifically expressed its intent to provide a clearer and stronger analytical foundation to "serve the Federal policy of encouraging the practice and procedure of collective bargaining."
Until the recent BFI decision, the Board standard was set out in TLI, Inc., 271 NLRB 798 (1984) and Laerco Transportation, 269 NLRB 324 (1984). Through those decisions, the NLRB incorporated the opinion of the Third Circuit Court of Appeals in NLRB v. Browning-Ferris Ind. of Penn., 691 F.2d 1117 (3rd Cir. 1981), that endorsed the Board’s position on the issue of joint-employment. That position cast a wider net for finding joint-employment, but the Board asserted decisions subsequent to TLI and Laerco have narrowed the scope and imposed additional requirements related to joint-employment that are not supported by the National Labor Relations Act (NLRA) or case law.
Under the new joint-employer standard, two (2) or more statutory employers are joint-employers of the same statutory employees if they share or codetermine the matters governing the essential terms and conditions of employment. Those terms and conditions include, among other matters, hiring, scheduling, seniority, overtime, work assignments and how work is performed. The Board’s revisited test applies two basic qualifications. First, the organizations in question must have a common-law employment relationship with the employees at issue. This is most often based on the degree of control a potential employer has over a worker. If a common-law employment relationship exists, the NLRB will consider whether the common-law employer possesses sufficient control over employees' essential terms and conditions of employment to permit meaningful collective bargaining.
Key to the Board’s written decision is that the revisited joint-employer standard only requires that a potential joint-employer possess the necessary authority, described as “reserved authority,” even if that person or organization does not exercise it. How far such “reserved authority” extends, even where not invoked, will be central to the decision of whether joint-employment exists.
Given the BFI decision, it is important for you or your company to review the contracts or agreements you have with outside organizations to determine if there is reserved authority sufficient to create exposure. In many cases, there may not be an issue with such agreements, but with this new evaluation process, there are also many that more readily create joint-employment.
The full BFI decision can be found at http://apps.nlrb.gov/link/document.aspx/09031d4581d99106. If we can help you address any issues that come from this new legal development, please contact us.
Hayley Lewis Folmar, Associate Attorney
Jason C. Taylor, Partner