A National Labor Relations Board interpretation of joint-employer status has worried many companies for years, even as the board under the Trump administration seemed to be backing off. But a new decision last week from the U.S. Court of Appeals for the D.C Circuit has just stirred the pot again.

At question was the concept of how and when two companies might be treated as joint employers of workers. There are many situations in which an employee for one company actually performs work for another. Contracting companies often do this. Corporations may have workers officially become employees of a contracting firm to reduce legal and regulatory obligations.

A 2014 NLRB ruling extended this to some franchisors like McDonald's that appeared to exercise significant control over franchisee employees. That made many companies nervous as it seemed to remove legal insulation that they once had.

Then the 2015 Browning-Ferris Industries decision found that a waste management company was a joint employer with a staffing firm of unionized employees.

A 2016 Department of Labor legal interpretation further strengthened the approach--and corporate concern.

In mid-2017, the Trump administration seemed to walk back the 2016 interpretation. But an NLRB Inspector General report found that one of the Board members deciding the case was a shareholder in the law firm representing the staffing company. So, in Feb. 2018, the NLRB overruled that finding and again reversed itself. Joint-employer status was again on.

Just last month, some members of Congress sent a letter to the NLRB, looking to eliminate the original Browning-Ferris Industries decision, claiming that the Board had "overturned decades of bipartisan legal precedent by replacing the predictable and clear 'direct and immediate control' standard for determining joint employer status with a vague test based on 'indirect' and 'potential' control over workers' terms and conditions of employment."

That argument was summarily removed by this latest court three-judge-panel decision in the lawsuit that Browning-Ferris had brought against the NLRB:

We hold that the right-to-control element of the Board's joint-employer standard as deep roots in the common law. The common law also permits consideration of those forms of indirect control that play a relevant part in determining the essential terms and conditions of employment. Accordingly, we affirm the Board's articulation of the joint-employer test as including consideration of both an employer's reserved right to control and its indirect control over employees' terms and conditions of employment.

The court did find that the NLRB approach to indirect control didn't consistently focus on common law limitations, and so the case will likely continue. But the confirmation about indirect control is likely one that companies won't soon be allowed to forget.

For entrepreneurs, don't assume that you can offload responsibilities onto a staffing firm to make life easier. If you do, you may find you give up some significant controls over the workers, like naming particular individuals you think should be disciplined or insist on the removal of a person.

Published on: Jan 4, 2019
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