The 8 Amici (Part 2): Review of 4 More Briefs Opposing Breach of Joint-Employer Precedent

Joint Employer—Eight Amici for the Employers

In total, 17 amicus briefs were submitted in June 2014, in the seminal National Labor Relations Board (NLRB) case on joint employers.

The case styled Browning-Ferris Industries of California, Inc. v. Sanitary Truck Drivers and Helpers Local 350 involves two employers, Browning Ferris Industries and their contractor Leadpoint, and one petitioner, the Teamsters.

The NLRB may decide the case as early as today, before the expiration of the term of Board Member Nancy Schiffer on December 16, 2014.

Amicus Briefs for Petitioner Teamsters Union

Nine amicus briefs supported the Teamsters’ proposed change to the thirty-plus-year precedent established to determine whether two or more different businesses jointly employ a worker. Two of these nine briefs proposing to cast off precedent came from government agencies: the National Labor Relations Board General Counsel and the Equal Employment Opportunity Commission. The other seven briefs were submitted by trial lawyers, professors, and unions.

Amicus Briefs for Employers

Eight amicus briefs opposed a change in the joint employer standard and supported the employers. These briefs were filed by business associations, councils, centers, and coalitions.

In this posting, I examine salient points from the second four of the eight amicus briefs opposing an NLRB change in precedent.

U.S. Chamber of Commerce

The Chamber makes many of the arguments already mentioned, including restating that the law of agency must be abided:

“[I]n determining ‘employer’ status, the Supreme Court has repeatedly held, as prior decisions of the Board itself have observed, that the Board is not free to ignore the law of agency. See, e.g., NLRB v. Town 7 Country Elec., Inc., 516 U.S. 85, 89-90 (1995); Allied Chem. & Alkali Workers, Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 1667-168 (1971); Roadway Package Sys., Inc. & Teamsters Local 63, 326 NLRB 842, 849 (1998).”[1]

It is well worth noting, as the Chamber does, that the Regional Director made an appropriate ruling in the underlying case, basing the decision on the current standard.

“On these facts, the Regional Director correctly determined that BFI is not a joint employer because it lacks direct and immediate control over the essential terms and conditions of employment of Leadpoint’s employees.”[2]

Like the ASA does, the U.S. Chamber hits the NLRB for not following Congressional intent in the statute:

“[B]oth the Act and Supreme Court precedent forbid the Board from imposing a bargaining obligation without regard to whether the putative “joint employer” is an employer under agency law. See Nationwide Mut. Ins. Co., 503 U.S. at 324-25.”[3]

In a good bit of research, the Chamber points out the U.S. House committee’s criticism of the NLRB when they wrote the 1947 amendments:

“Notably the House Committee Report accompanying the 1947 amendments harshly criticized the Board’s finding in Hearst that independent contractors were employees under the Act, noting the term ‘employee’:

‘according to all standard dictionaries, according to the law as the courts have stated it, and according to the understanding of almost everyone, whith the exception of members of the National Labor Relations Board, means someone who works for another for hire… [and who] work for wages or salaries under direct supervision. …

It must be presumed that when Congress passed the Labor Act, it intended words it used [such as ‘employee’] to have the meanings that they had when Congress passed the act, not new meanings that, 9 years later, the Labor Board might think up. … It is inconceivable that Congress, when it passed the act, authorized the board to give every word in the act whatever meaning it wished.’

H.R. Rep. No. 245, at 18, 80^th Cong., 1^st Sess. (1947); Allied Chem., 404 U.S. at 167 (quoting the same report).

Significantly, the 1947 amendments also modified the definition of ‘employer’ to encompass only those persons who are ‘acting as an agent of an employer.’ 29 U.S.C. § 152(2) (emphasis added), rather than any individual ‘acting in the interest of an employer’ as the statute previously read. This change, too, was designed to reinforce the applicability of agency law to the determination of who is an employer within the meaning of the Act.”[4]

National Association of Manufacturers, National Restaurant Association, and National Waste & Recycling Association

The National Association of Manufacturers, National Restaurant Association, and National Waste & Recycling Association impressively represent about 25% of the American workforce and disturbingly assess the serious and adverse effects that a change to the joint employer standard would have on their industries.

“Changing the standard to create a legal fiction that a host facility is the ‘employer’ of another wholly independent company’s employees—whose employees it does not hire, supervise, discipline, discharge, or pay—will disrupt operations, likely increase costs, and impair Amici’s members’ ability to respond to changing market conditions and demands.”[5]

Their brief strongly argues that the current standard protects existing rights:

“Petitioner provides no credible evidence whatsoever that the current joint-employer standard is insufficient to protect the rights of temporary workers from companies that contract with their employers, the staffing agencies. Rather, there is ample evidence to the contrary – that the TLI and Laerco standard does indeed protect the rights of temporary employees. …”[6]

“In fact, the Board has seen a sharp drop in the number of unfair labor practice charges and representation petitions being filed. In 2000, the Board received a combined total of 35,249 unfair labor charges and representation petitions. Ten years later, the number had dropped to 25,855. NLRB FY2009 Annual Report, p. 2, Chart 1. Thus, Petitioner seems to offer a solution to a problem that does not exist.

Furthermore, Petitioner has not shown that a split in authority has surfaced among the various Circuit Courts… Indeed there is no rift among the Circuits…”[7]

The brief also delves into the issues of stare decisis:

“Although the Board is not constrained by the doctrine of stare decisis, (see NLRB v. Kostel Corp., 440 F.2d 347, 350 (7^th Cir. 1971)) [citing NLRB v. Wirebound Box Co., 356 F.2d 88 (1966)] it should nonetheless consider how adopting a new joint employer standard may affect those parties who have relied on the current standard for decades. As Justice Louis Brandeis noted, ‘Stare decisis is usually the wise policy, because in most matters it is more important that the applicable rule of law be settled than it be settled right.’[8] … Amici submit that the joint employer doctrine is settled and it is ‘settled right.’”[9]

The associations explain that contractor/subcontractor relationships are caught in the NLRB crosshairs:

“Equally problematic is the effect an expansive indirect control standard would have on the contractor/subcontractor relationship, potentially rendering many, if not most, contractor/subcontractor relationships ‘joint employer’ relationships. This would severely impair the manufacturing industry, as a substantial percentage of manufacturers contract with third parties to perform a wide variety of functions…”[10]

Alluding to the NLRB General Counsel’s argument about franchisors explaining optimum times for franchisees to send workers home, the National Restaurant Association weighs in:

“A model franchisor often provides considerable business guidance and resources to its franchisees in order to help the franchise flourish and succeed while maintaining the franchisor’s standards and enhancing its brand. This works to the advantage of all involved, including employees who benefit from that success.

The resources and guidance provided by franchisors, however, do not result in control of the franchisee employees’ wages, hours, terms or conditions of employment; they do not amount to codetermination of the essential aspects of employment.”[11]

The waste and recycling business highlights:

“It would be unreasonable to deem the primary waste company to be a joint employer of the subcontractor’s employees, given that they are only indirectly and marginally affecting the other’s employees. Indeed, the subcontractor’s employees would likely have hundreds of other customers on their daily routes, and construing them to be jointly employed by the primary waste company simply because they service a single customer is both unreasonable and nonsensical.”[12]

The associations make a good, final point about how the standard that the Teamsters want the Board to adopt would entail the Board abdicating its duties:

“Were the Board to adopt such an ‘indirect control’ standard it would, in effect, be abdicating its statutory responsibility to ensure its decisions ‘are rationally based on articulated facts…’, not ‘conclusory rationales.’ NLRB v. Yeshiva University, 442 U.S. 672, 691 (1980).”[13]

Driver Employer Council of America

The Driver Employer Council of America (DECA) starts its brief with a 1977 quotation of Bert Lance, President Jimmy Carter’s Director of Office and Management and Budget:

“Bert Lance believes he can save Uncle Sam billions if he can get the government to adopt a single motto: “If it isn’t broken, don’t fix it.” He explains: “That’s the trouble with government: fixing things that aren’t broken and not fixing things that are broken.[14]”[15]

The distribution/logistics companies represented by DECA employ drivers and support manufacturers, wholesalers, and retailers. They key on the effect of a change:

“Manufacturers, wholesalers, retailers and certain other motor carriers who have historically depended on DECA-member firms may well adopt alternatives that have not been as efficient, effective or reflect overall control and impact over the employment relationships at issue.”[16]

“[A]dopting an effective presumption of joint employer status and applying it to a huge volume of services arrangements throughout the economy would have dramatic and substantial effects.”[17]

DECA directly pushes back against the brief of the EEOC:

“The reversal urged by the EEOC and other parties arguing for a return to the amorphous standard that characterized the Board approach prior to the TLI and Laerco holdings would not be justified by any dramatic changes in the nature of contracting relationships in the years since adoption of the Board’s joint employer standard.”[18]

“[T]he EEOC states that its test looks at factors similar to the factors currently being applied by the Board…and…that the outcome generally will find in favor of joint employer status.[19] Outside of demonstrating a clear bias towards a finding of joint employer relationships without regard to questions of direct and immediate impact on employment, the EEOC fails to adequately reflect the purposes and goals of the NLRA…”[20]

Retail Litigation Center

The Retail Litigation Center (RLC), in defending retailers across the country, goes right after the fudge factor of “industrial realities” and the misplaced indirect control proposed test:

“The ‘industrial realities’ test is simply unworkable: it asks whether the totality of the circumstances makes an entity a ‘necessary party’ to the collective bargaining process, but fails to provide a framework for answering that question. The ‘indirect control’ test contravenes the purpose of the Act because it would find joint-employer status outside of the statutory employer/employee relationship. Both standards ultimately undermine retailers’ lawful and legitimate ability to contract with third-parties.”[21]

RLC also finds a good, on-point quotation from former NLRB Member Craig Becker regarding the use of direct control versus indirect control as a criterion:

Even those who have more recently sought to broaden the definition of ‘employee’ under the Act recognize that such direct supervision is necessary. As former Board Member Craig Becker acknowledged, ‘direct supervision constitutes the sine qua non of employment regulated by the law.’ Labor Law Outside the Employment Relation, 74 Tex. L. Rev. 1527, 1539 (1996) (internal quotation marks omitted).

RLC points up the importance of a bright-line standard that provides certainty and predictability:

“The Board’s reliance on a test that meaningfully affects matters relating to the employment relationship, such as hiring, firing, discipline, supervision, and direction, has provided certainty and predictability to retailers that frequently engage with third-party contractors. See Riverdale Nursing Home, Inc., 317 NLRB 881, 882 (1995); H.S. Care, LLC, 343 NLRB 659 (2004).”[22]

Lauding the existing bright-line standard, RLC writes:

“This fact-specific approach makes the most sense. Unlike the Union’s amorphous “industrial realities” test or “indirect control” test, the Board’s existing standard is straightforward to apply. Further, it is both “logical and functional.” See Browning-Ferris Indus.[23], 691 F.2d at 1124.”[24]

In criticizing this reprisal of Board Member Wilma Liebman’s proposal to revamp the joint employer standard, RLC reminds us:

“The Union cites former Member Liebman’s concurrence in Airborne Freight Co., 338 NLRB 597 (2002) to argue that the Board should abandon its precedent here[25]. The Board, however, soundly rejected former Member Liebman’s recommendation in that case[26]:

Simply put, the Board’s test for determining whether two separate entities should be considered to be joint employers with respect to a specific group of employees has been a matter of settled law for approximately twenty years. . . Thus, approximately 20 years ago, the Board, with court approval, abandoned its previous test in this area, which had focused on a putative joint-employer’s indirect control over matters relating to the employment relationship . . . . We would not disturb settled law[27].”[28]

Apparent NLRB General Counsel Retreat is Only a Faint

Well after all of these amicus briefs were filed, National Labor Relations Board General Counsel Richard Griffin addressed[29] the joint employer controversy. During a recent speech on October 24, 2014, at the West Virginia University College of Law, he recounted his own brief in the case and his latest thinking.

Griffin appeared to back off the aggression evinced in his brief, presumably after feeling heat from employers across the country. Referring to the uproar when he authorized charging McDonald’s as a joint employer, after all of the above briefs had been submitted for over a month, Griffin subtly stated, “[A] lot of noise was subsequently created.”[30]

Speaking to franchisor protection of brand uniformity and quality, Griffin stated, “In that area we have a problem legally for our theory.”[31] “So here we are arguing for a return to the traditional standard, and here are these cases that under the traditional standard find no joint employer in the franchisor-franchisee relationship,”[32] Griffin continued.

Griffin, in both his capacity as a Board Member and as General Counsel, has repeatedly pushed for thwarting precedent, but uncharacteristically claimed during the WVU appearance that he did not favor changing joint employer precedent[33] when necessary to protect brand uniformity and quality.

Properly understood, however, the General Counsel’s apparent rhetorical faint should be seen as nothing more than sleight of hand. Business should not be lulled into believing that Griffin is softening.

Rather, a thorough examination of the General Counsel’s brief in the BFI case clearly shows that Griffin intends to have the “typical” franchisor-franchisee relationship be considered a joint-employer relationship[34]. True protection of brand uniformity and quality would constitute a smaller minority of the cases.

Make no mistake: Griffin remains firm in proposing to change 30 years of precedent that necessitates “direct and immediate control” of workers in order for a business to be considered a joint employer. If the NLRB were to accept the General Counsel’s proposal to move to “indirect” control or “potential” control or “industrial realities” as rationales for naming joint employers, the change would be sweeping and devastating for all sorts of businesses nationwide.

Business should not be tricked and must prepare for the worst.