Joint Employer Test under NLRA Poised for Yet Another Change

Prior to 2015, well-established NLRB precedent held that two entities would be considered joint employers only if they actually exercised direct, immediate control over the essential employment terms and conditions of the workers at issue. In 2015, in a significant departure from this precedent, the NLRB announced a new standard in Browning-Ferris, 362 NLRB No. 185 (2015), holding that two entities are joint employers if they retain the right to exercise even indirect control over the essential employment terms and conditions of workers, and even if one entity never actually exercises such control. At the end of 2017, however, the Board rejected this broad test in its Hy-Brand decision, 365 NLRB No. 156 (2017), and embraced the narrower joint employer standard it had long-applied before Browning-Ferris. The Hy-Brand decision was vacated in early 2018, however, leaving the Browning-Ferris test as the controlling law.

What the NLRB Could Not Change via Decision-Making it may Change via Rulemaking

The NLRB has announced that, on September 14, 2018, it will issue a proposed rule that, if eventually adopted as a final rule, would replace the current Browning-Ferris test with a test very similar to the NLRB precedent in place prior to Browning-Ferris.

Under the proposed rule, an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.

In its press release announcing the proposed rulemaking, the NLRB stated that the proposed rule reflects the Board majority’s initial view, subject to potential revision in response to public comments, that the NLRA’s intent is best supported by a joint-employer 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.

Please contact your Clark & Gotzler attorney if you have any questions about this important development or other issues related to joint employment.