On December 14, 2017, the National Labor Relations Board reversed its decision in the infamous Browning-Ferris Industries matter, which had dictated the test for determining the existence of a joint employer relationship that resulted in companies incurring substantive liability when their operations only tangentially related to those of the entity actually at fault. Following the Board’s ruling, the test for determining joint employer status will be returned to its pre-Browning-Ferris state, which required a stronger showing of employer control in order to find a joint employer relationship.
Joint employment exists when two or more entities exercise some degree of control over the work or working conditions of an employee. The most common examples of this relationship are staffing agencies or franchises. Should a joint employer relationship exist, the employers are held responsible, both individually and jointly, to the employee for compliance with employment related statutes such as FMLA requirements and wage and hour laws.
Prior to the Browning-Ferris decision in September 2015, the test for joint employment required that two or more employers exert direct and significant control over the same employee such that they share matters governing the essential terms and conditions of employment (i.e. hiring, terminating, and discipline). The degree of employer control had to be actual and substantial, which in turn required a strong showing to satisfy the test.
The Browning-Ferris decision made it substantially easier to demonstrate a joint employer relationship by propounding a new test which required only that the entities in question be “employers” within the meaning of the common law, and share or codetermine matters regarding the employee’s terms and conditions of employment. Essentially, the test no longer mandated that employer control be direct or immediate; a showing of indirect or subsidiary control over working conditions would suffice. The test also expanded on those matters found to be “essential terms and conditions” of employment beyond simply hiring and firing employees, to employee scheduling, assigning work, determining method of performance, and dictating seniority and overtime.
As a result of the Board’s holding on Thursday, the Browning-Ferris test will no longer be utilized. Rather, there will be a return to the original test which focuses on the degree of direct and immediate control by employers. This is potentially good news for employers, especially those who work in tandem with entities like staffing agencies, as employees will be required to satisfy a higher burden to demonstrate the existence of a joint employer relationship. The full extent of this holding will likely be hotly contested. However, the decision constitutes a step in the right direction for already heavily burdened employers.