Recent Changes To Joint Employer Status Under The NLRA

By Owen H. Laird, Esq.

In a recent decision, the National Labor Relations Board (“NRLB”) expanded its definition of what constitutes a “joint employer.”  This seemingly innocuous change in policy could have significant ramifications for millions of American employees.

The case concerned California company Browning-Ferris Industries (“BFI”), which operates a recycling facility.  BFI employs workers outside of the facility to collect and prepare waste materials (“outside workers”) but uses employees provided by another company, Leadpoint Business Services (“Leadpoint”), to perform tasks inside BFI’s facility, such as sorting and cleaning (“inside workers”).  BFI’s outside workers are represented by a union, which sought to represent the inside workers as well.

BFI opposed the unionization effort on the grounds that the employees supplied by Leadpoint were not BFI employees and, therefore, could not be part of the same bargaining unit as BFI employees.  The union contended that BFI and Leadpoint were joint employers, and, therefore, a single bargaining unit would be appropriate.

Prior to this decision, the standard used by the NLRB to determine whether an entity was a joint employer was a “direct control” test, meaning that, if the entity exercised direct control over working conditions, it was a joint employer.  In the BFI decision, the NLRB abandoned the “direct control” test, adopting an “indirect control” or “reserved control” test.  Prior to this change, for the purpose of the National Labor Relations Act, to be an employer, an entity had to actively supervise the workers in question.  Now, if an entity exercises control through another entity, both entities can be considered joint employers and, consequently, unions can negotiate directly with either entity.

The BFI decision reaches far beyond the single California recycling plant at issue; it has potential ramifications for all employees who work under two or more different employers.  For example, this change will likely affect fast-food workers because they typically work for an individual franchise within a much larger company.  Under the old definition, a fast-food worker’s only employer was the franchise where that individual worked.  If these workers attempted to form a union, the bargaining unit would be limited to those working at that franchise (or perhaps a handful of franchises if the same company owned them).  As a result, historically, fast-food workers have not unionized because hundreds or thousands of tiny, fragmented bargaining units are not a particularly effective bargaining structure.  Now, however, fast-food workers may be able to form a single union encompassing many or all of a corporation’s franchises as a single, united group, increasing their bargaining power.

This decision could have a major effect on the ongoing efforts of fast-food workers to achieve nation-wide pay increases.  Now, in addition to protesting and lobbying, these workers may be able to take advantage of existing labor laws and form a union to pursue these goals.

Nonetheless, corporate interests are sure to mount a legal challenge against the NLRB’s decision, and the breadth of this new “indirect control” system has not yet been tested.  Courts may overrule the NLRB’s decision, and even if they ultimately uphold the decision, they may not settle this dispute for years.

If you believe that your employer is violating federal, state, or local labor laws, contact The Harman Firm LLP.