Hunton Employment & Labor Perspectives

In a brief filed on September 7, 2016 (“NLRB Brief”), the National Labor Relations Board (“NLRB” or “the Board”) urged the United States Court of Appeals for the District of Columbia Circuit to uphold its new “joint employer” standard, set forth in Browning-Ferris Industries, 362 NLRB No. 186 (Aug. 27, 2015). Through this new standard, the Board now seeks to impose collective bargaining and other NLRA obligations on companies that may indirectly control certain conditions of employment, or that merely reserve (but do not exercise) such control.  Casting aside the more precise “direct and immediate control” standard it explicitly adopted in 1984, the Board in Browning-Ferris opted instead to analyze joint control issues on a fact-specific, case-by-case basis, with a greater focus on reserved and indirect control.  The case on appeal is entitled Browning-Ferris Industries of California, Inc., d/b/a/ Browning-Ferris Newby Island Recyclery v. National Labor Relations Board,  Nos. 16-1028, 16-1063 and 16-1064.

Browning-Ferris Industries (supported by a broad coalition of industry trade groups and the United States Chamber of Commerce) appealed this imprecise new standard, which injects tremendous uncertainty into labor relations.  The contracted-for distribution of responsibility and liability in innumerable business arrangements  (including those between franchisors and franchisees, temporary staffing agencies and their clients, construction contractors and subcontractors,  retail warehousing and distribution structures, and members of accountable health care organizations) faces disruption if, in the Board’s view, the arrangement leaves employees with insufficient bargaining power.

Central to the legal dispute in this case is the interpretation of the common-law principles which underlie employment relationships.  The Board urges the view that “indirect and reserved control” are part of the common-law definition of employment, and that its consideration of those factors in its joint-employer analysis is reasonable.  (NLRB Brief 39-49.)

Browning-Ferris and its amici contend that such an interpretation directly conflicts with the 1947 Taft-Hartley amendments to the National Labor Relations Act, in which (among other things) Congress revised the definition of “employee.”  At that time, Congress clarified that the governing standard for an employment relationship under the common law is whether an employer exercised “direct supervision” over an employee – i.e., direct and immediate control.

The Equal Employment Opportunity Commission (“EEOC”), the agency responsible for enforcing laws which prohibit discrimination in employment, filed an amicus brief in support of the NLRB on September 14, 2016 (“EEOC Brief”).  In that brief, the EEOC equates its self-described fact-based, “flexible test” for joint employer status with the NLRB’s new test.  The EEOC’s test looks primarily at direct-control factors (for example, who hires and fires, who assigns work, who controls daily activities, who furnishes equipment, who pays the worker and how the worker is treated for tax purposes.  (EEOC Brief p. 9.)  The EEOC argues that it also considers a potential joint employer’s “right to control” and “indirect control” terms and conditions of employment, and that this fact-specific test has not created undue uncertainty or confusion. (EEOC Brief pp. 15-17.)  However, the EEOC “does not inquire into joint employer status unless there is reason to believe that an entity knew or should have known of discrimination by another entity and failed to take corrective action within its control.”  (EEOC Brief p. 6, fn. 2.)  Its “joint employer” inquiry thus appears to be narrower in scope than the NLRB’s.

A copy of the Browning-Ferris brief can be found here.  A copy of the NLRB brief can be found here.  A copy of the EEOC brief can be found here.

Intervening party Teamster Local 350 (the successful charging party before the Board in the Browning-Ferris case) filed its brief on September 28, 2016.  Browning-Ferris’s reply brief currently is scheduled to be filed on October 26, 2016.