Today I attended oral arguments at the D.C. Circuit Court of Appeals that addressed the National Labor Relations Board’s (NLRB) vague and extremely broad definition of a joint employer.
In an August 2015 decision, Browning-Ferris, the NLRB dramatically changed when a company may be held liable for labor violations by other employers they contract with, by merely exercising indirect control or possessing unexercised potential control over work conditions like hiring, supervision, and wages. Additionally, a company deemed a joint employer would also assume bargaining responsibilities if the other employer was unionized. Previously, a company established a joint employer relationship when they directly controlled the essential terms and conditions of employment of another company they contract with.
I’ll discuss two of the more noteworthy exchanges that took place.
Of note, no one at the Court could quite get their finger on what “indirect” control meant. One consistent complaint from the judges was that the NLRB’s decision was fuzzy and did not contain a bright-line test that could be used to confirm what exactly constitutes a joint employer relationship. In other words, what interaction between a company and a contractor crosses the line regarding indirect control?
As was mentioned by Judge Millett, contractors want to make their customer (the employer) happy and are willing to take input from them. For example, Browning-Ferris may not like slow workers and may tell that to LeadPoint, the contractor. LeadPoint may fire those workers to keep the customer happy.
Judge Randolph posed the question of whether a hotel owner who hired landscapers to mow the lawn would be considered a joint employer under the NLRB’s standard if the hotel owner told the landscaper’s supervisor they are doing a poor job and need to perform their job in different manner?
In those examples, is that interaction just exerting economic influence to get the end result that the company paid for or indirect control that establishes a joint employer relationship?
Ultimately, a sufficient definition of what constitutes indirect control was left wanting. From the discussion, it remains unclear where the line is between exerting economic influence over a contractor and indirect control.
As Reuters reported, “Judge Patricia Millett of the U.S. Court of Appeals for the D.C. Circuit said the National Labor Relations Board had ‘dropped the ball’ in its legal analysis, which made her concerned about whether it can police the line between genuine joint employment and contractor relationships.”
The other interesting line of questioning also hit on the vague nature of the NLRB’s joint employer standard. If an employer is found to be a joint employer with a contractor, what are they required to bargain over?
If an employer is found to control, either directly or indirectly, certain work terms and conditions of a contractor, what bargaining responsibilities come along with it? Similar to the question of what constitutes indirect control, no one could quite pin down what bargaining responsibilities an employer would assume if considered a joint employer.
The Hill reported:
Millett asked if the contract between BFI and Leadpoint would still be terminable at-will by either party as the agreement states or if the companies would have to negotiate with the union first.
After a long pause, [NLRB attorney Joel] Heller said it would depend on what the collective bargaining agreement they enter into with the union says.
In essence, if the NLRB determines a company is a joint employer but only over wages, the company would likely take on far greater bargaining responsibilities than just over wages, according to the NLRB’s lawyer’s answer.
In conclusion, the NLRB’s Browning-Ferris decision upended 30 years of precedent and creates immense uncertainty. No one is quite sure what the ramifications of the decision is and what line you have to cross to become a joint employer. What is known? The question marks surrounding the new joint employer standard are likely to make many businesses think twice about contracting with small businesses and give unions more leverage in negotiations.
It is imperative that Congress step in and pass legislation that clarifies and defines a joint employer in reasonable terms and does not stifle economic growth. Fortunately, a fix is available. Last session, Sen. Lamar Alexander (R-TN) introduced the Protecting Local Business Opportunity Act, which would restore the previous joint employer standard.
Also, see my op-ed in today’s Investor’s Business Daily on the NLRB’s joint employer standard.