Browning-Ferris Industries Ruling on Joint Employment

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Background on Browning-Ferris Industries

On August 27th, 2015, the National Labor Relations Board (NLRB) published its decision in Browning-Ferris Industries of California Inc., 362 NLRB No. 186, in which it set a new, lower standard for establishing joint employment under the National Labor Relations Act (NLRA).

Browning-Ferris Industries (BFI) owns and operates a recycling facility in California and contracted with another company called Leadpoint to provide and manage the workers assigned to the recycling line. Leadpoint workers voted on whether they wanted a certain union to represent them, and the union asked the NLRB to find that BFI was a joint employer of the workers, thus obligating BFI to bargain with the union (along with Leadpoint) on the terms and conditions of employment.

Previous NLRB Standard

Under the previous standard, joint employment would be found where two conditions were met: (1) a common law employment relationship existed between the worker and the alleged joint employer (here, BFI); and (2) the joint employer actually exercised direct and immediate control over the terms and conditions of employment that was not limited and routine.

NLRB decisions had clarified that joint employer status would be found where the alleged joint employer “meaningfully affect[ed] matters relating to the employment relationship, such as hiring, firing, discipline, supervision and direction.” This standard had been in effect since the early 1980s with little modification.

New, Broader Definition of Joint Employments

In the BFI case, the NLRB concluded that a new, broader definition of joint employment was necessary so that the NLRA could apply to the “diversity of workplace arrangements in today’s economy” and best effectuate the remedial purposes of the NLRA. Accordingly, the NLRB modified the second prong of the test so that it is no longer necessary that the alleged joint employer actually exercise control over worker’s employment; instead, it is enough if the joint employer reserves the right to exercise control, even if that right is never exercised.

The NLRB concluded that a new, broader definition of joint employment was necessary so that the NLRA could apply to the “diversity of workplace arrangements in today’s economy” and best effectuate the remedial purposes of the NLRA.

In addition to the above, the right to control no longer needs to be direct and immediate: “If otherwise sufficient, control exercised indirectly—such as through an intermediary—may establish joint employer status.” In its application, the NLRB found that BFI was a joint employer of the Leadpoint workers, and thus obligated to engage in the collective bargaining process for any term or condition of employment that BFI had the right to control.

Potential Takeaways

The BFI ruling is unquestionably the most significant decision by the NLRB in years. However, because it is a “duty to bargain” case and not a “representation” case, its immediate effect on users of contingent labor—as a practical matter—will only be felt by companies using contingent workforces that are already unionized.

There is another case pending before the NLRB—Miller & Anderson, Inc., NLRB Case 05-RC-079249—that likely will be decided by the NLRB in the coming year that has the potential to have a greater impact across a broader spectrum of companies that use contingent labor.

At issue is whether contingent workers employed by one entity can be combined with some or all of the end-user company’s regular employees to form one “bargaining unit,” without the consent of either employer. If the NLRB says “yes,” then unions will have an easier time organizing end-user companies, as the process of forming multi-employer bargaining units for an election will be simplified and can proceed without needing the consent of the employers at issue.

James Cahalan is the director of Global Compliance at PRO Unlimited and has written extensively on the topic of employment law.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of PRO Unlimited and is not to be construed as legal solutions or positions. Contact an attorney for specific advice and guidance for specific issues or questions.

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