Home / Commentary / OP-ED: New rule may soon solve joint-employment dilemma

OP-ED: New rule may soon solve joint-employment dilemma

Richard Meneghello

Rich Meneghello

BridgeTower Media Newswires

You know who your employees are. Or do you?

Because of some expansive National Labor Relations Board cases and aggressive government investigators, union officials and plaintiffs’ attorneys, you may be employing people and not even know about it. That’s because the idea of “joint employment” has been expanded to take in quite a few more people in the past several years. Companies may very well be liable for certain types of workers who they had assumed were someone else’s responsibility –  i.e., the temps, contractors, consultants, outsourced, or other non-permanent workers who are doing their jobs under their roofs but are never directly in their employ.

But good news awaits. Earlier this summer, the National Labor Relations Board, also known as the NLRB, announced it would soon start the rulemaking process to “clarify” the current joint-employment standard. Given the composition of the current NLRB majority, employers have every reason to believe that the new rule that will be rolled out will help tilt the system back toward fairness and sanity.

The joint-employment dilemma has taken many twists and turns in the past several years. For 30 years or so, the NLRB had held that two companies could be considered joint employers only if they shared or jointly decided matters governing the essential terms and conditions of employment, and actually exercised the right to control those conditions.

However, in 2015, the NLRB renounced this joint-employer test through what is now known as the Browning-Ferris decision. This decision essentially eliminated the requirement that employers actually exercise control. Instead, the NLRB found that businesses need only retain the contractual right to control to be considered joint employers – even if they have never exercised that right. Further, the NLRB held that indirect control (e.g., control through an intermediary) would be sufficient to find a company was a joint employer.

Employers thought they had caught a break in December 2017 when the NLRB effectively overturned Browning-Ferris in the Hy-Brand Industrial Contractors Ltd. case, reverting back to the old standard. But in February, the NLRB was forced to vacate that decision in response to allegations that a member of the NLRB had an unacceptable conflict of interest. As a result, employers remain subject to the Browning-Ferris standard.

In April, once NLRB Chairman John Ring was installed as the fifth member of the NLRB to provide a Republican majority for all consequential actions, the wheels were set in motion to restore a much-needed balance on a number of matters. And it didn’t take long for the NLRB to act.

On May 9, the majority made a surprise announcement suggesting that the idea of joint employment was high on its agenda and that rulemaking was almost certain to follow. “Whether one business is the joint employer of another business’s employees is one of the most critical issues in labor law today,” Ring said in a statement that accompanied the press release. “The current uncertainty over the standard to be applied in determining joint-employer status under the Act undermines employers’ willingness to create jobs and expand business opportunities.”

The official NLRB action was short and sweet. In an agency filing included in the Unified Agenda of Federal Regulatory and Deregulatory Actions, the majority stated: “The National Labor Relations Board is considering engaging in rulemaking to establish the standard for determining joint-employer status under the National Labor Relations Act.” The agenda noted that this is a “long-term action” and no target date was included in the release; Ring only said he hoped to move “as soon as possible.”

This caught the attention of several Democrats in Congress who expressed opposition to unilateral pre-ordained rulemaking. In a letter dated June 5 responding to several U.S. senators who had questions about this development, Ring said that a majority of the NLRB is “committed to engage in rulemaking” and that it will issue a Notice of Proposed Rulemaking on joint employment “certainly by this summer.” He noted that internal preparations are already under way and that the NLRB is working toward issuing the proposed rule. Ring expressed hope that the final rule would “bring far greater certainty and stability to this key area of labor law.”

Two NLRB members – the two Democratic appointees – now do not seem inclined to participate. The release specifically noted that the inclusion of this proposal on the NLRB’s regulatory agenda should not be taken to mean that the members Mark Gaston Pearce and Lauren McFerran are participating.

In fact, in a bit of Twitter tit-for-tat, McFerran tweeted: “The regulatory agenda is a Chairman initiative, not formal NLRB action. I’ll approach any proposal w/an open mind, but urge the majority to deliberate carefully, allow public input, and abandon the ‘decide first, ask questions later’ approach from [former-Chair] Miscimarra’s end-of-term.” Ring responded on Twitter six minutes later: “How could anyone argue against notice and comment rulemaking? It’s the most fair process and best way to get everyone’s views on the joint employer standard. The Board majority will work to issue a proposed rule ASAP, and we will consider the views of all interested parties.”

The next step in this process would be the issuance of a Notice of Proposed Rulemaking, which we expect before the end of summer. The NLRB would thereafter engage in a formal process that includes receiving and considering comments from interested parties and members of the public before officially establishing any new rule. It could take months for any such rule to be finalized, and no doubt critics of the rule would try to use the courts to block or delay it.

Still, this may be an easier way forward than awaiting congressional action. The Save Local Business Act, which would narrow the definition of “joint employment” to eliminate many employer headaches, has been stalled in Congress because of opposition from Senate Democrats.

It is also possible for the NLRB to resolve the conflict-of-interest issues that led to the abandonment of the Hy-Brand decision, or to simply accept another case involving similar issues and release a new standard using an alternate channel. Whichever direction the NLRB takes in the coming weeks and months, employers should monitor the rule’s progress and keep their fingers crossed.

Rich Meneghello is a partner in the Portland, Ore., office of Fisher Phillips, a national firm dedicated to representing employers’ interests in all aspects of workplace law. Contact him at 503-205-8044 or rmeneghello@fisherphillips.com, or follow him on Twitter – @pdxLaborLawyer.

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