Happy New Year! Joint Employer Test Gets Muddier

By Patrick Scully

On December 28, 2018, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision partially granting enforcement to the National Labor Relations Board’s controversial decision in Browning-Ferris Industries (316 NLRB No. 186 (2015), “BFI”) which radically altered the test for when separate companies can be declared “joint employers” under the National Labor Relations Act. In a 2-1 decision, the court affirmed the NLRB’s use of elements of “indirect control” over a contractor to find joint employment, but remanded the case to have the NLRB distinguish those elements from aspects of the business relationship intrinsic to company-to-company contracting.  In other words, the court failed to resolve the main problem with the BFI decision—that such routine contracting provisions put all contractors at risk of being declared a joint employer with their business partners. In a searing dissent, Senior Judge Randolph pointed out that the court should not even render a decision while the NLRB is in the process of issuing a formal rule on the definition of “joint employer”.  Judge Randolph argued that the majority’s opinion effectively short-circuits the NLRB’s rulemaking process, as the majority held the Agency is entitled to no particular deference on the issue of which companies may be declared joint employers.  Judge Randolph pointed out that by failing to distinguish between normal business contract provisions and evidence of so-called “indirect control”, the court was creating more confusion and assuring that any eventual NLRB decision would return to the court on appeal.  The more immediate question for employers, however, is whether the NLRB will now be able to return to a more rational definition of joint employment that requires evidence that two employers directly codetermine employees’ essential terms and conditions of employment. Perhaps we will have that answer by 2020.

Browning-Ferris Industries of California, Inc. v. National Labor Relations Board, United States Court of Appeals for the District of Columbia Circuit, Case No. 16-1028 (December 28, 2018).