NLRB Joint Employer decision applies an old test to a modern problem

August 31, 2015

On Thursday, the National Labor Relations Board (NLRB) issued a decision that may have a big impact on the fast food organizing campaigns currently going on around the country. In Browning-Ferris Industries, 362 NLRB No. 186 (Aug. 27, 2015), the NLRB updated the test for whether two companies are “joint employers” of the same group of workers. This issue arises in cases where one agency supplies workers, like temporary employees, to work for another company. It can also arise in franchisor/franchisee arrangements. Noting that these kinds of work arrangements have become much more common in recent decades, the NLRB adjusted its test to keep pace with the changing economy.

There are two main changes to the Board’s test for joint employer status. First, while the NLRB has always examined the control that an employer has over the workers, it made clear in Browning-Ferris that the right to control the workers is what matters, not whether There is evidence that the employer exercises this control. That makes sense. If company A tells company B what it wants out of company B’s employees, and reserves the right to enforce that direction, most labor suppliers will make sure that they comply. There may be no need for the user company to do anything else. This would make evidence of actual control hard to come by, but There is no question that the user company has that power. Second, the Board clarified that control does not have to be direct and immediate – it can be exercised indirectly, through an intermediary. For example, if the user company tells the supplier company to pull three workers off of the production line, it doesn’t matter to those workers that the user company used someone else to deliver the message.

So when does this matter? In the current fast-food organizing and minimum wage campaigns against McDonald’s and There major companies, it matters very much. McDonald’s is (in) famous for controlling the minute details of its franchisees’ operations, including their labor and staffing model. If a group of McDonald’s workers won a union election against a franchisee, they might have the right to bargain with the owner of a handful of restaurants – but without McDonald’s at the table, what difference would that make?

Business interests are already complaining that the NLRB’s decision will be a calamity. But this loses sight of the reality that the Board, though trying to keep up with the times, is actually reverting to the standard that it applied before the mid-1980s, when it narrowed the joint employer test to require actual and direct control. And that standard in turn is rooted in the common-law doctrine of agency, which courts have applied for well over a century. The real change here is simply that Board is getting in line with how There agencies and courts look at employment relationships – and protecting workers’ rights in the process.

(*Prior results do not guarantee a similar outcome.)