One positive effect of reversed 'joint employer' standard

In one of our latest posts, we reported on three recent decisions by the National Labor Relations Board that analysts describe as notably pro-business. In broad terms, the board was able to leverage a brief 3-2 Republican majority to reverse several rules that business advocates found tilted the scales in favor of worker unionization.

In this post, we intend to look more closely at the decision that rolled back the 2015 NLRB established definition of what constitutes a joint employer. Previously the board determined that the joint employer designation could apply in labor disputes, even when one organization exercised only indirect control over another. Critics observed that this broad standard meant it was easier for contractors and employees in franchised businesses to organize.

Reversal provides more business protection

The specific rule in question is the Browning-Ferris Industries decision. In it, BFI was found to be a joint employer with another company it had hired to provide contract workers for various BFI functions. Despite the contractor relationship between the two firms, when workers sought to unionize, the board declared them joint employers based on indirect control.

At the time of the decision, the board said it was needed to "keep pace with changes in the workplace and economic circumstances" as reflected in an economy where gig and contract work is on the rise. However, observers noted the ruling could spark labor relations issues where none had existed before and increase risks for companies that rely on third party staffing or contractors for their human resource needs. The NLRB ruling last month reinstated the direct control test; providing what some call more protection to businesses.

To be clear, the NLRB did not jettison the joint employer standard altogether. It merely rolled the definition back to state that such conclusions depend on applying the test of direct control by the entities involved. Employee disputes will still occur and where counsel or litigation is required, the Kisner Law Firm stands ready to serve.

Categories: Employment Law