In a 3-2 decision, the National Labor Relations Board (NLRB) overruled the Board’s 2015 decision in Browning-Ferris Industries, 362 NLRB No. 186 (2015) (“Browning-Ferris”), and returned to the pre–Browning Ferris standard that governed joint-employer liability. The reversal could have important implications for the ability of workers to win concessions from employers through collective bargaining or union formation at a franchise level.
According to the NLRB, in all future and pending cases, two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.
Under the pre–Browning Ferris standard, which is now restored for NLRA cases, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship. Under the Obama-era doctrine, a corporation could be held liable for labor violations that occurred at the franchise even if the control it exerted was indirect.
The Board majority concluded that the reinstated standard adheres to the common law and is supported by the NLRA’s policy of promoting stability and predictability in bargaining relationships.
We will continue follow these developments affecting multiple industries that utilize a franchise or contractor structure, from retail and hospitality, to construction and manufacturing.