“NLRB’s ‘joint employer’ standard overturned decades of established precedent and ignored Congress’s command that federal bureaucrats should not attempt to expand the commonly understood definitions of ‘employer’ and ‘employee.’”
—Richard Samp, WLF Chief Counsel

WASHINGTON, DC—The U.S. Court of Appeals for the District of Columbia Circuit today refused to enforce a 2015 National Labor Relations Board (NLRB) employment ruling under which regulated entities could be deemed “joint employers” of another company’s employees—and then held fully liable for any obligations owed to those employees. The decision in Browning-Ferris Industries of California, Inc. v. NLRB was largely favorable to WLF, which filed a brief urging rejection of the NLRB ruling. The court agreed with WLF that Congress did not authorize NLRB to designate a company the “joint employer” of the employees of its independent contractors simply because the company exerts control over the manner in which the independent contractors operate.  Rather, such designation is permissible only if the company controls the “essential terms and conditions of employment” for the contractor’s employees.

The case involves a recycling facility owned and operated by Browning-Ferris. Like many companies, Browning-Ferris has hired a separate firm to perform a portion of the work at its facility. The separate company (Leadpoint) performs all the normal employer-related functions for its employees (e.g., hiring, firing, paying, and supervising). NLRB nonetheless ruled that Browning-Ferris is a joint employer of Leadpoint’s employees because, by virtue of its authority to terminate its contract with Leadpoint, it possessed indirect control over the working conditions of Leadpoint’s employees. The NLRB ruling overturned a 32-year-old standard, under which companies were not deemed joint employers unless they exercise direct and immediate control over employees.

In ruling against NLRB (which had ordered Browning-Ferris to bargain collectively with the Leadpoint employees), the D.C. Circuit recognized that “indirect” control over a contractor’s employees “can be a relevant consideration in the joint-employer analysis.”  But the court faulted NLRB for basing its joint-employer determination on aspects of Browning-Ferris’s control over Leadpoint that were irrelevant to Browning-Ferris’s “status as an employer.”

It is not clear what effect, if any, today’s decision will have on a pending NLRB rulemaking proceeding regarding joint-employer status. In a proposed rule issued in September, NLRB proposed to abandon its 2015 Browning-Ferris standard and return to the standard that was in effect between 1984 and 2015.