NLRB: Joint Employers can be Held Liable for the Other Company’s Employee Violations

worker lowJust weeks since the overtime rule was proposed, the U.S. National Labor Relations Board is going after businesses again. The latest decision in the Browning Ferris Industries (BFI) case has opened businesses utilizing temporary or independent contract labor to increased liabilities. The decision redefines and expands the “joint employer” liability under the National Labor Relations Act. Under the joint employer doctrine, one company can be found liable for another company’s unfair labor practices and breaches of collective bargaining agreements.

For the last 30 years, the Board has determined whether two separate entities are joint employers under the Act by assessing whether they exert such direct and significant control over the same employees such that they “share or codetermine those matters governing the essential terms and conditions of employment . . . .”

The Aug. 27 decision has expanded the standard to include situations where one entity exercises direct or indirect control over the essential terms and conditions of employment of another entity’s employees or has the right to do so (even if they do not exercise that right). 

In its decision, the Board found that BFI was a joint employer with a staffing company that supplied employees to BFI to perform various work functions for BFI. In finding that BFI was a joint employer with staffing company, the Board relied on indirect and direct control that BFI possessed over essential terms and conditions of employment of the employees supplied as well as BFI’s reserved authority to control such terms and conditions.

A quote from one of two opposing Board members: “Under the majority’s test, the homeowner hiring a plumbing company for bathroom renovations could well have all of that indirect control over a company employee!”

Leading up to this decision, many business groups were predicting that, if enacted, businesses would have no choice but to cut all ties to temporary or contract labor.

Right now the U.S. Chamber and the Coalition for a Democratic Workplace are reviewing the decision and considering options for litigation. Further information is available here. Stay tuned for updates.

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