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UPDATE: NLRB Proposes Joint Employer Rule That Would Overrule Browning Ferris

Published by and on October 19, 2018

Employers rejoice as the NLRB takes steps to return decades-old joint employer standard.

On September 14, 2018, the National Labor Relations Board (“Board”) published a Notice of Rulemaking regarding the joint employer standard used under the National Labor Relations Act (“NLRA” or “Act”). The proposed rule would overturn the joint employer standard set forth in the Board’s 2015 decision in the Browning-Ferris Industries.

Under the proposed rule, a company would only be considered a “joint employer” of a separate entity’s employees “if the two employers share or co-determine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction.” The Board stated that an employer may be found to be a “joint employer” only if it possesses and actually exercises substantial, direct and immediate control over the conditions of employment and has done so in a manner that is not limited and routine. If the considered a “joint employer” under the proposed rule, then a company may be held vicariously liable for labor violations under the NLRA.

In its announcement of the proposed rule change, the Board stated that rulemaking in this area would foster predictability, consistency, and stability in determining joint employer status under the NLRA. The Board further stated that the proposed rule reflects the Board’s majority view that the NLRA’s intent is best served by a joint employer doctrine that does not hold liable third party entities who have not played an active role in deciding essential terms and conditions of employment for another employer’s employees.

The standard under the proposed rule requires that a putative employer have actual and direct control over employment matters, as opposed to the Browning-Ferris standard, which requires only reserving authority to control or exerting indirect control over employment matters. The proposed rule comes on the heels of the Board’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. v. Dakota Upshaw et al. being vacated, which had effectively reinstated the much more expansive Browning-Ferris joint employer standard.

The public comment period regarding the proposed rule will close on November 13, 2018.

Welter Insight

The Board’s proposed rule is good news for companies built on a franchise model or who choose to engage independent contractors. Although the rule is likely to see some revision after the public comment period closes, the proposed joint employer test will limit liability for these companies. Once established, the new rule should provide stability for business relationships moving forward.

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