Hunton Employment & Labor Perspectives

As we have reported in this space, the National Labor Relations Board (“Board”) made waves several weeks ago with its highly controversial new test for determining if an entity is a “joint employer” of another entity’s employees. Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015). The Board has wasted no time in seeking to extend its new test to the health care industry.

On October 19, the Board’s General Counsel issued an unfair labor practice complaint against health care provider Community Health Systems, Inc. (“CHS”) and seven of its subsidiary hospitals spread across four states, alleging they are joint employers of certain nurses and other hospital workers. The General Counsel contends CHS is jointly liable with its subsidiary hospitals for discriminating against union members, refusing to collectively bargain in good faith, and interfering with other employee rights – all in violation of the National Labor Relations Act (“NLRA”).

The complaint does not state what facts the General Counsel believes support his claim that CHS is a joint employer of the hospital workers in question. However, under the Board’s new joint-employer test, an entity will be found to be a joint employer if it merely exercises indirect control over the terms and conditions of certain workers’ employment, or, even more alarmingly, simply possesses (but never exercises) the ability to control such terms and conditions. If the General Counsel gets his way, parent entities like CHS could become responsible as joint employer for the bargaining obligations and unfair labor practice liabilities of separately incorporated operating subsidiaries.

Because Browning-Ferris dealt with a company’s use of outsourced contract workers, it is unclear how the Board will apply its new joint-employer test in the parent-subsidiary context. Regardless, it is clear that the General Counsel does not view the Board’s new joint-employer test as having limited application. As the complaint against CHS shows, he plans on using that test as established in Browning-Ferris in cases affecting a wide range of industries.

We are monitoring this case closely and will report on major developments. Meanwhile, the General Counsel’s allegations against CHS are a troubling signal that the Board’s new joint-employer test could become the new “normal” in the health care industry going forward.