Joint Employer

From 1984 until August 2015, the National Labor Relations Board considered two entities to be joint employers only if both exercised direct and immediate control over the essential terms and conditions of employment for a group of employees; this included having the ability to hire, fire, discipline, supervise or direct the employees. Joint employers are responsible for bargaining with any union representing the joint employees and are mutually liable for any violations of the National Labor Relations Act either entity commits with respect to those employees.

In today’s world, large and small businesses alike have contractual relationships with dozens, hundreds or even thousands of franchisees, vendors, and contractors. The long-standing joint employer standard 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.

In 2015, however, the Board upended this well-settled law in Browning-Ferris Industries (BFI) – a decision which drastically expanded the NLRA’s standard for determining joint employer status to it include indirect or even just unexercised potential control over the terms and conditions of employment. This confusing standard has created uncertainty and drastically expanded the number of business relationships that could trigger joint employer liability.

On December 14, 2017, the NLRB attempted to rectify this situation in Hy-Brand Industrial Contractors, which purported to overrule BFI and reinstate the prior long standing joint employer standard. The Board later vacated 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 force.

Thankfully, the NLRB is now trying to fix the damage done by Browning-Ferris through notice-and-comment rulemaking. On May 9, the NLRB announced its intent to propose a new rulemaking on the joint employer standard. On June 13, CDW filed a petition for rulemaking with the National Labor Relations Board to remedy the confusion caused by the Browning-Ferris standard which, if answered affirmatively by the Board, would clarify the operating landscape and protect countless businesses. By filing the petition, CDW hopes to further solidify the Board’s commitment to rulemaking on this important issue.

In addition, 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 Browning-Ferris decision. This presents the Board with an opportunity to reverse BFI through new adjudication and gives the NLRB another opportunity to reinstate the traditional joint employer standard.

Congress, President Trump, and the NLRB should move to codify into law the traditional joint employer standard through 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. CDW will continue to fight against expansions to joint employer liability.

Joint Employer Fact Sheet

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