NLRB Vastly Expands Its Joint-Employer Standard

The Browning-Ferris decision overturns 30 years of precedent and opens up a wide variety of business relationships to allegations of joint-employer status, including staffing agencies, on-site contractors, outside suppliers, and franchise relationships.

In a decision issued on August 27, the National Labor Relations Board (NLRB or the Board) overruled 30 years of joint-employer jurisprudence, announcing that it will no longer require direct and immediate control over terms and conditions of employment to establish a joint-employer relationship. Instead, a joint-employer relationship may be found based on the right to control terms and conditions of employment, even if that control is indirect and/or unexercised. This new standard can be applied to a wide variety of business relationships in which one employer contracts for the work of another business entities' employees, including outside suppliers, on-site contractors, and franchisees.

Background

The Board, with court approval, has historically applied the joint-employer analysis set forth in TLI and Laerco Transportation to determine whether a particular group of employees is solely or jointly employed by one or more employers.1 In TLI and Laerco, the Board rejected the notion that indirect, minimal, or hypothetical control should establish a joint-employer relationship and concluded instead that joint-employer status would require proof of a significant degree of direct and immediate control over the employees in question.

The Browning-Ferris Decision

In Browning-Ferris Industries of California, Inc.2, the Board held that a joint-employer relationship exists if two or more entities "share or codetermine those matters governing the essential terms and conditions of employment." In applying that standard, the Board announced that it will no longer require direct and immediate control by an alleged joint employer over the terms and conditions of employment to establish a joint-employer relationship. Instead, the right to control, even if indirect and/or unexercised, may be sufficient to establish a joint-employer relationship.

In analyzing whether a joint-employer relationship exists, the Board stated that a case-by-case, fact-intensive evaluation of the allocation and exercise of control in the workplace must be undertaken. This case-by-case analysis will be informed by several key principles:

The concept of "essential terms and conditions of employment" will not be limited to the core...