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A proposed National Labor Relations Board ruling that would restore the previous joint employer status standard would remove much of the uncertainty that the current rule, which was promulgated by the Obama administration, has created for employers, say experts.
In its 3-2 decision in Browning-Ferris Industries of California Inc. in 2015, a Democrat-controlled NLRB overturned the standard in place since 1984 that firms must have “immediate and direct” control over a worker to be considered a joint employer. It held instead that a company need have only indirect control of a worker and not even exercise that control to be considered a joint employer.
The National Labor Relations Board proposed the new rule in September, and the public has been asked to submit comments on the proposal by Nov. 13. Experts say they expect that while there may be some modifications, the final ruling will essentially be approved as proposed.
The rule affects franchisor-franchisee relationships as well as firms that use third-party vendors, including staffing firms, to fill positions peripheral to their focus, such as cafeteria workers.
“It is appropriate and helpful for the board to take this important step in providing a definitive resolution to questions that have existed about joint employer status going back to the board’s 2015 decision in Browning-Ferris Industries,” said former NLRB Chairman Philip A. Miscimarra. Mr. Miscimarra, a Republican, now leads Morgan, Lewis & Bockius LLP’s special appeals practice in Washington.
He, along with former NLRB board member Harry I. Johnson III, a Republican who is now a partner with Morgan Lewis in Los Angeles, had dissented in the Browning-Ferris decision.
“The proposed rule-making goes to the standard of substantial direction and immediate control, which is consistent with precedent that existed for many years, up until the Browning-Ferris Industries decision,” said Donald W. Schroeder, a partner and labor and employment attorney with Foley & Lardner LLP in Boston.
Elizabeth Weldon, a partner with Snell & Wilmer LLP in Costa Mesa, California, who specializes in franchise litigation, said Browning-Ferris “expanded the scope of possible joint employment findings,” putting firms more at risk of being held liable for labor relations violations “that in their view they had nothing to do with.”
It means employers who use staffing companies or franchise models can rest easier and “can take some comfort knowing the NLRB will be more friendly to them,” said David J. Przybylski, an Indianapolis-based partner with Barnes & Thornburg LLP’s labor and employment department.
“It’s good news for employers generally, because it potentially is going to minimize the circumstances in which two or more entities can be found to be joint employers” under the National Labor Relations Act, he said.
The agency seems interested in replacing the current standard “with common sense, practical day-to-day concepts like actual control and direct authority,” said Steven M. Bernstein, a partner with Fisher & Phillips LLP in Tampa, Florida, and labor lawyer who represents employers. This will allow businesses to evaluate their exposure, he said.
Michael L. Sullivan, a principal and chair of the labor and employment group with Goldberg Kohn Ltd. in Chicago, said, “The new standard was so amorphous and made the issue so uncertain that, particularly for franchises and companies with lots of affiliates, it made life too unpredictable for their business model.”
He added, “How you measure how someone could or might do something is always very challenging from a legal perspective when it hasn’t happened.”
NEW YORK — The joint employer concept is an ongoing hot-button issue that is going to continue to be of concern to private and nonprofit employers.