The National Labor Relations Board鈥檚 current joint employer standard has received a mixed review from a federal circuit court. The decision is disappointing to 51风流, which sought reversal of the standard in an amicus brief in the case, but it provides some valuable guidance on how courts may evaluate the Board鈥檚 ongoing rulemaking efforts.
In general, joint employer status under the National Labor Relations Act (NLRA) exists where two otherwise separate employers co-determine some or all of the terms and conditions of employment for the employees of one of the employers. This typically arises in a situation where one employer retains the other employer to provide business services.
In a 2-1 in Browning-Ferris Indus. of Cal., Inc. v. NLRB, the U.S. Court of Appeals for the District of Columbia Circuit held that the joint employer test articulated in the Obama Board鈥檚 2015 Browning-Ferris was lawful. The test considers both an employer鈥檚 unexercised 鈥渞ight to control鈥 and its indirect control over employee terms and conditions of employment, in addition to the traditional consideration of active and direct control. The court stated that the Board鈥檚 consideration of the 鈥渞ight to control鈥 and 鈥渋ndirect control鈥 factors was consistent with common-law agency principles.
Notably, the D.C. Circuit was careful to limit the scope of its decision. The court explicitly said it was not addressing the question of whether a 鈥渞ight to control鈥 alone or indirect control alone could be dispositive to a joint employer finding. Instead, it merely held that such factors were relevant to the analysis, without making a judgment as to how much weight they should carry.
The court reasoned that the Board was obligated to apply common-law agency principles when crafting its joint employer test because Congress intended common-law to govern the definitions of 鈥渆mployee鈥 and 鈥渆mployer鈥 under the NLRA. The court then examined common-law agency and determined that both reserved control and indirect control were historically relevant to determination of an employee-employer relationship under the NLRA. Thus, the Board did not err by considering these types of control in its analysis.
Still, rather than uphold the decision entirely, the court remanded the case to the Board to clarify the types of indirect control that factored into the Board鈥檚 analysis. The court distinguished between indirect control over an employee鈥檚 essential terms and conditions of employment exercised through, e.g., an intermediary, and more attenuated indirect control that arises through routine aspects of business-to-business contracting. Because the Board failed to distinguish between these two types of indirect control, the court could not determine whether the Board鈥檚 decision relied on the proper factors in determining that Browning-Ferris was a joint employer.
The court also found that the Board failed to meaningfully apply the second step of its test, which considers whether the would-be joint employer possesses sufficient control over employees鈥 essential terms and conditions of employment to permit meaningful collective bargaining. The court noted that the Board never delineated what terms and conditions are 鈥渆ssential鈥 to make collective bargaining 鈥渕eaningful鈥 and never clarified what 鈥渕eaningful collective bargaining鈥 might require.
The decision is particularly timely given the Trump Board鈥檚 ongoing effort to establish a joint-employer standard through regulation. The Board recently proposed a that seeks to return the standard to more closely resemble the test in existence before the 2015 Browning-Ferris decision, which considered only actual and direct control. Although the dissenting judge in the D.C. Circuit opinion argued the court should have withheld its decision until the Board completed the rulemaking process, the decision may help guide the Board to craft a judicially acceptable rule.
Importantly, the ruling appears to leave the Board with sufficient leeway in both crafting and justifying its proposed rule. The court鈥檚 holding that the Browning-Ferris standard was applied too vaguely arguably strengthens the Board鈥檚 argument that rulemaking is necessary to provide stability and predictability to the rule. Further, the court did not dictate the relative evidentiary weight to be given to indirect or reserved control, which will presumably allow the Board to draft a rule that fills in the gaps and brings the Board鈥檚 unique labor policy expertise to bear in deciding how much weight should be given to these factors.
For now, the Obama Board鈥檚 Browning-Ferris test remains the law of the land, subject to further clarification from the Board on remand in the case or through rulemaking. 51风流 intends to submit comments on the proposed rule before the public comment deadline.
Editor鈥檚 Note: This article is based on a previously published by attorneys , , and of , who also drafted the amicus brief referenced in the article, and is reprinted with permission.