On September 14, 2018, the National Labor Relations Board released a draft rule that would reverse the NLRB’s 2015 decision in Browning-Ferris, 362 NLRB No. 186 (2015).  

In Browning-Ferris, the NLRB adopted a new, looser standard for determining whether two or more entities could be considered “joint employers” of a single individual. Under Browning-Ferris, an entity may be considered a “joint employer” even if it has never exercised control over the terms and conditions of an individual’s employment. Rather, employers could be considered “joint” based simply on the existence of reserved control, indirect control, or control that is limited and routine—essentially, the existence of potential control is enough.

The NLRB’s new proposed rule would restore the “traditional” standard for determining joint employer status: specifically, an entity is only a “joint employer” if it “possesses and exercises substantial, direct and immediate control” over an individual. Assuming the rule becomes final, it would become more difficult for an individual to demonstrate he or she has two or more joint employers (as it was prior to the Browning-Ferris decision).

This is the NLRB’s second attempt to reverse the Browning-Ferris standard, though its first through the rule-making process. The NLRB’s December 2017 decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017), temporarily overturned Browning-Ferris. But the NLRB reversed and vacated Hy-Brand just two months later, in February 2018, due to the involvement in the decision of NLRB Member William Emanuel, who was previously a partner at Littler Mendelson (the firm representing one of the employers in Browning-Ferris).

Public comments may be submitted on the proposed rule for 60 days, though it is reasonable to expect the proposed rule will become final sometime thereafter.

Key Takeaways

The proposed rule only applies to claims brought under the NLRA. Also, importantly, a return to the “traditional” standard will not change California’s test for joint employment under the state’s employment statutes (which requires simply that an entity have the right to control the terms, manner and means of an employee’s work in order to be considered an employer). If the proposed rule does become final, employers with unionized vendors should review the extent to which they exercise control over the vendor’s employees, and consider instituting measures limiting the exercise of their control in order to reduce the risk of being subject to any NLRB action.