CLIENT UPDATE

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December 18, 2018

NLRB Overrules Browning-Ferris Joint Employer Test

On December 14, 2017, in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017), the National Labor Relations Board, in a 3-2 party-line vote, rejected the joint-employer standard adopted in Browning-Ferris Industries, 362 NLRB No. 186 (2015).  By overruling Browning-Ferris, the Board returned to its well-established and longstanding “direct and immediate control standard” used prior to 2015.  The Hy-Band decision is one of several major reversals of Obama-era rulings issued in the last week of Board Chairman Philip Miscimarra’s term which ended on December 16, 2017.

Browning-Ferris eliminated the long standing requirement that a putative employer exercise direct and immediate control over the putative employees in order to be found a joint-employer and  instead focused on whether the putative employer retained authority to “share or codetermine those matters governing the essential terms and conditions of employment.”

In returning to the “direct and immediate control standard,” the Board held that a finding of joint-employer status will once again require “proof that putative joint-employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”

By overruling Browning-Ferris, the Board held that it is returning its treatment of join-employer status to a standard consistent with common-law, and numerous federal and state court decisions.  Writing for the majority, Chairman Miscimarra wrote, “We return today to a standard that has served labor law and collective bargaining well, a standard that is understandable and rooted in the real world.  It recognizes joint employer status in circumstances that make sense and would foster stable bargaining relationships.”

Key Takeaways For Employers:

  • Joint-employer status once again requires proof that: (1) the alleged joint-employer entities have actually exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control); and (2) the control must be “direct and immediate” (rather than “indirect”).
  • Joint-employer status will not result from control that is “limited and routine.”
  • By applying the well-established “direct and immediate control standard” it is less likely that the Board will find joint-employer status for employees of a company’s subcontractors or franchisees.
  • Hy-Brand will apply to all future and pending cases before the Board.

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Please contact us if you have any questions regarding the Board’s decision or for guidance on what steps may be taken to minimize the potential for being found a joint-employer.