NLRB Expands Joint Employer Doctrine

One employer’s exercise of indirect control over working conditions at another employer, or even its reserving the right to exercise that control, is enough to make the two companies joint employers, a divided National Labor Relations Board ruled today.

The 3-2 ruling means that companies that use franchises or subcontractors can be held liable for labor violations by those companies and also be forced to negotiate collective bargaining agreements with unions representing those companies’ workers.

Before this ruling, joint employer required that that one company exercise direct control over the other’s operations. But the board majority said that standard no longer reflects today’s changing economy.

The board decision stems from a 2013 election petition by the Teamsters union, which sought to represent workers at a Browning-Ferris Industries recycling facility in Milpitas, Calif. The workers were employed by Leadpoint, a Browning Ferris subcontractor, to sort out recyclable items and clean the facility.

The petition triggered the question of whether Browning Ferris and Leadpoint were joint employers. An NLRB regional director found that they were not joint employers because they did not share direct and immediate control over conditions of employment, such as hiring, firing and discipline workers.

The union appealed the decision, which led to the board decision on Thursday. Thursday’s ruling means that Browning Ferris and Leadpoint are considered joint employers, and ballots cast in a union election will now be unsealed and counted.

Next on the NLRB’s radar screen: McDonald’s Corporation, which is resisting the board’s effort to find it liable for labor law violations at its local restaurants, arguing that those restaurants operate independent of the main corporation.

Republicans in Congress won’t like this ruling one bit. Expect them to mount a repeal of this rule by legislation. A court challenge to the rule is also possible.

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