The National Labor Relations Board (NLRB) has turned back the clock on the Obama-era standard of what constitutes a joint employer and now maintains that joint employers must have “direct and immediate” control over employees, a standard that held for decades previously.
The case in question is Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. Though the Administrative Law Judge (ALJ) in the case relied on the Obama-era standard of “reserved” joint control, or “limited and routine” control, upon review the NLRB voted 3-2 to overturn that standard and return to “direct and immediate.” Nevertheless, the board agreed with the judge’s decision that the two entities were joint employers and jointly liable.
What this means in practical terms is that, for instance, McDonald’s will not be responsible if a franchisee violates labor laws because it does not have “direct and immediate” control over the franchisee’s employees. The case review thus overturns the decision in Browning-Ferris that established the looser standard that would’ve held McDonald’s, as an example, responsible for a franchisee’s transgressions.
In a press release, the NLRB explained:
In all future and pending cases, two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately(rather than indirectly) in a manner that is not limited and routine. Accordingly, under the pre–Browning Ferris standard restored today, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship. The Board majority concluded that the reinstated standard adheres to the common law and is supported by the NLRA’s policy of promoting stability and predictability in bargaining relationships.
The newly constituted Trump-era board voted along party lines, as did the board in the earlier Browning-Ferris decision.
Chairman Philip A. Miscimarra was joined by members Marvin E. Kaplan and William J. Emanuel in the majority opinion. Members Mark Gaston Pearce and Lauren McFerran dissented in the case.