How the Expansion of Joint Employer Liability Can Affect Your Business

Upcoming webinar will explain recent court decision’s impact on labor and franchisor relationships.

September 04, 2015

WASHINGTON – Last week, the National Labor Relations Board (NLRB) announced a massive expansion of joint employer liability under federal labor law. The Wall Street Journal described the NLRB’s decision in Browning-Ferris Industries of California, Inc. (BFI) as “a new joint-employer standard that radically rewrites U.S. labor law and upends thousands of business relationships . … Labor unions are celebrating a decision sure to harm diverse industries in every state.” 

As a business owner, it’s essential to consider the why, who, what and how of the decision, including understanding potential risk mitigation factors. NACS counsel Steptoe & Johnson will be hosting a webinar on Wednesday, September 9 at 2 p.m. (EDT) to address some of these issues. 

The logic behind the NLRB’s dramatic expansion of joint employer liability is not hard to understand. Fewer than 7% of private sector employees are currently represented by unions, and that number continues to decline. Given that the NLRB regulates union-employer relations, its relevance might well decline as union density declines. But many key provisions of the National Labor Relations Act also apply to virtually all private sector non-union employees as well. Several years ago, the current NLRB began to expand the day-to-day impact of the NLRA on non-union employers. The NLRB wants tens of millions of non-union employees to recognize that the NLRA gives them significant workplace protections and that they can invoke the NLRB’s substantial resources—at absolutely no cost—to “take their employers to court” over workplace grievances. The recent decision enhances the NLRB’s relevance because it expands the NLRB’s reach into millions of non-union workplaces.

In fact, the BFI decision potentially affects every private-sector employer that contracts work, leases employees, or franchises its business model. How?  The decision creates joint-employer liability under federal labor law where (a) one employer uses the labor of workers supplied by another employer, and (b) the “user” employer possesses—even if it does not exercise—indirect control over terms and conditions of employment of the “supplier” employer’s employees.  What does “indirect control” mean?  The simple act of setting “brand management” quality control, productivity or safety standards for a supplier employer may qualify.  And that short list only touches the surface of the myriad factors that the current NLRB may rely on to find joint employer liability. 

The decision forces employers to decide whether to continue—or move away from—contracting, employee leasing or franchise business relationships in any situation where the user employer might be found liable for the contractor’s mistakes, errors of judgment or poor workplace decisions.  Employers who eliminate those NLRB risks completely "upend" established business models at significant cost and disruption.  Employers who decide to stay with their existing business models face the prospect of getting embroiled in the labor relations liabilities of independent third parties.

Next week’s webinar will explore the many issues related to the BFI decision, led by Steptoe and Johnson partner Steve Wheeless, leader of the firm’s NLRA practice. Click here to register.

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