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Joint Employer

On September 14, 2018, the National Labor Relations Board (NLRB) issued a notice of proposed rulemaking (NPRM) containing proposed changes to the joint employer standard under the National Labor Relations Act (NLRA). The joint employer standard is used to determined when two or more entities are jointly responsible for the terms and conditions of employment over the same group of employees. These terms and conditions include but are not limited to having the ability to hire, fire, discipline, supervise, or direct employees. Joint employers are responsible for bargaining with any union representing the joint employees and are mutually liable for any violations of the NLRA either entity commits with respect to those employees.

In the NPRM, the NLRB said it plans to return to the pre-2015 standard, under which only direct and immediate control over essential terms and conditions of employment can trigger joint employer status. In doing so, the Board would effectively overturn the August 2015 decision in Browning-Ferris Industries (BFI) – a decision which drastically expanded the NLRA’s joint employer standard to include indirect or even just unexercised potential control over the terms and conditions of employment. The BFI standard created massive uncertainty throughout the business community and drastically expanded the number of business relationships that could trigger joint employer status, exposing almost every contractual relationship to unwarranted liability.

In today’s world, large and small businesses alike have contractual relationships with dozens, hundreds or even thousands of franchisees, vendors, and contractors. The joint employer standard proposed in the NPRM, which was in place from 1984 until August 2015, provided clarity and protected these businesses from unnecessary involvement in labor negotiations and disputes involving workplaces in which they do not have direct control. The standard allowed hundreds of thousands of small and local businesses to flourish, creating millions of jobs.

The Trump-era NLRB has already attempted to reinstate the original joint employer standard. On December 14, 2017, the NLRB issued Hy-Brand Industrial Contractors, which purported to overrule BFI and reinstate the traditional standard. The Board unfortunately was forced to vacate the Hy-Brand decision in response to a controversial opinion by the agency’s inspector general and ethics officer. As a result, BFI’s expansive and confusing standard is once again in effect.

Additionally, the General Counsel of the NLRB, Peter Robb, issued a memorandum (Memorandum GC 18-02) on December 1, 2017, instructing all Regional Offices to submit for review all cases involving “significant legal issues” to the NLRB’s Division of Advice, including cases that deal with the joint employer standard and the application of the BFI decision. This presented the Board with an opportunity to reverse BFI through new adjudication and reinstate the traditional standard.

In its most significant move yet, the NLRB is now trying to undo this misguided policy change through its new NPRM. The proposed rule would reinstate the traditional standard and require direct and immediate control over essential terms and conditions of employment.

CDW has already made known to the NLRB the importance of reestablishing the traditional joint employer standard. On June 13, CDW filed a petition for rulemaking with the Board to remedy the confusion caused by the BFI standard in hopes that the Board would clarify the operating landscape and protect countless businesses. Furthermore, CDW has filed letters of support for legislation codifying the original standard into law, letters to appropriators calling for policy riders prohibiting the Board and other agencies from using funds to implement the new standard, letters for the record for various hearings on the Obama-era standard, and amicus briefs in various cases involving application of the new standard (all of which can be found in our resource page). CDW will continue its work on this issue and will file comments on the Board’s NPRM.

Congress, President Trump, and the NLRB should continue to pursue all available avenues to reinstate the traditional joint employer standard, including decisions, rulemaking and legislation, in order to provide an understandable, predictable and workable standard that allows local businesses and entrepreneurs to create jobs. This will strengthen the American economy and provide avenues for the American Dream.

Joint Employer Fact Sheet

Please see our resources page for more information on this issue.