The National Labor Relations Board has restored an earlier, more expansive definition of what it means to be a joint employer in a decision with ramifications for franchisers such as McDonald’s and companies that use staffing agencies, independent contractors and other non-traditional work arrangements.
The 3-2 decision on Aug. 27 involving Browning-Ferris Industries of California could make the companies more liable for wage and hour and other employment practices liabilities.
“With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances,” the NLRB said in an Aug. 27 statement.
The NLRB said it will now consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so, in determining joint-employer status, a standard not in force since the 1980s.
It found that BFI was a joint employer with Leadpoint, the company that supplied employees for cleaning and sorting of recycled products, because BFI possessed indirect and direct control over essential terms and conditions of the workers’ employment and had the authority to control such terms and conditions.
In the decision, voted along partisan lines with Democrats prevailing, the NLRB said it applied “long-established principles to find that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law; and (2) they share or co-determine those matters governing the essential terms and conditions of employment.”
Board Chairman Mark Gaston Pearce was joined by Members Kent Y. Hirozawa and Lauren McFerran in the majority opinion; Members Philip A. Miscimarra and Harry I. Johnson III dissented.
