Untangling the New Definition of Joint Employer

Myra Thomas | January 13th, 2016 | MMG

This story appears in full in the January/February 2016 issue of Middle Market Growth.

The National Labor Relations Board’s 3-2 decision last summer in the case involving Browning-Ferris Industries of California broadened a longstanding definition of “joint employer.” In turn, many more companies are potentially subject to federal labor laws and collective bargaining. The ruling changes a decades-old standard under the National Labor Relations Act, effectively expanding the responsibility of companies to their franchisees’ employees, as well as contingent staff.

The Aug. 27 NLRB ruling has left many franchisers, as well as companies that use contract workers, worried about the economic implications of dealing with labor disputes and collective bargaining for a group of workers with whom they’ve traditionally had a hands-off relationship. The NLRB wouldn’t respond to requests for comment. However, in a press release, the agency cited “changes in the workplace and economic circumstances” as well as a growing contingent workforce in the United States as its motivations for modifying the joint-employer status.

The previous standard required a company to show significant operational and supervisory control over a franchisee’s employees or its contract workers in order to be considered a joint employer. The new ruling expands the definition, and joint-employer status could be determined for a company with direct, indirect or potential control over the working conditions of its franchisee’s employees, along with the company’s contract staff. In its recent decision, the NLRB found that Browning-Ferris, a waste management company, had “indirect and direct control” over contract workers who were cleaning and sorting recyclable materials. […]

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