September 1, 2015Client Alert

NLRB Broadens Definition of Joint Employer

In an August 27, 2015 opinion, the National Labor Relations Board (The Board) refined its joint employer standard in finding that BFI Newby Island Recyclery (BFI) and a staffing agency (Leadpoint Business Services) were joint employers for workers provided by the staffing agency to work in a BFI recycling facility. The Board stated that the key test is not whether a joint employer exercises its control over the employees’ terms and conditions of employment, but whether it possesses such control. The decision ran counter to years of Board decisions related to joint employer status.

The Board, in its decision, stated that the existing joint employer standard, reflected in a 1982 Third Circuit Court of Appeals decision, had been changed over the years through NLRB decisions that imposed additional requirements for finding joint employer status that were not supported by the 3rd Circuit opinion, the common law or the National Labor Relations Act. The Board said that the additional requirements, which it believed to significantly and unjustifiably narrow the circumstances where a joint employment relationship could be found, left the Board’s joint employment decisions out of step with changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships.

The Board restated the 3rd Circuit’s joint employer standard. Under that standard, the Board may find that two or more employers are joint employers of the same employees if they “share or codetermine those matters governing the essential terms and conditions of employment.” The Board focuses the inquiry as to “whether there is a common-law employment relationship with the employees in question. If this common law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.”

The Board also stated that it would no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. The question is whether the employer “possesse[s] sufficient control over the work of the employees to qualify as a joint employer with" another employer.

Factors the Board will consider in determining who possesses control over an employee’s terms and conditions of employment include hiring, firing, discipline, supervision and direction, setting wages and hours, dictating the number of workers to be supplied, controlling scheduling, seniority, overtime and assigning work and determining the manner and method of work performance.

The decision significantly increases the likelihood that joint employer status will be found. Thousands of companies that previously believed they were not joint employers may need to re-evaluate their legal status.

back to top