News & Updates

National Labor Relations Board Expands Joint Employer Status August 31, 2015

In a 3-2 decision along party lines on Thursday, the National Labor Relations Board (NLRB, or Board) dealt a significant blow to fast food restaurants and other businesses that rely on the franchisee model as well as those organizations that utilize staffing agencies to supply their workers. In this highly anticipated decision, the NLRB overturned more than 30 years of established law by significantly expanding its joint employer standard. The Board Majority characterized its former longstanding joint employer analysis as “out of step with changing economic circumstances,” specifically noting the growth in contingent employment relationships, as well as that more than 2.87 million of the nation’s workers were employed through employment agencies in August 2014. If this decision survives on appeal, employers that currently rely upon staffing agencies will be forced to reevaluate their business models for obtaining labor, and franchisors must decide whether to assert more or less control over their franchisees.

Under the previous standard, the NLRB  reserved joint employer status for an employer that exercised actual, direct control over essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction. Under the terms of the most recent decision, the mere authority, or right to control, essential terms and conditions of employment — even indirectly — will suffice to establish joint employer status. The Board will find that two or more entities are joint employers of a single workforce if they are both employers within the meaning of the common law;  and they share or codetermine those matters governing the essential terms and conditions of employment.  

In the decision, the NLRB considered whether BFI Newby Recyclery (BFI) was a joint employer with Leadpoint Business Services (Leadpoint), which provided staff to BFI under a temporary labor services agreement. The Board found that BFI and Leadpoint shared, or codetermined, essential terms and conditions of employment of Leadpoint’s employees. According to the Board, BFI’s authority to directly and indirectly control essential terms and conditions of employment — coupled with its reserved authority to control the same — deemed it a joint employer of Leadpoint’s employees. The Board reversed the decision of the Regional Director and ordered that the ballots that were impounded on April 25, 2014 be counted within 14 days, and if the employees voted to be represented by the Teamsters, to issue the appropriate certification, requiring BFI to join Leadpoint in collective bargaining negotiations with the Teamsters.

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