NLRB Fixes the Joint Employer Mess it Created!

Yesterday, the National Labor Relations Board (NLRB) overturned one of the most controversial, confusing and pro-union decisions to come from the federal agency during the Obama era, when it struck a serious blow to certain union overreach efforts for the foreseeable future. As a result, employers who indirectly supervise union employees on a worksite, or that work alongside or hire unionized subcontractors or staffing agencies should rest easier, because today they are less likely to be unwillingly considered an employer of and forced to bargain with these unionized employees.   

How did we get to the point where we need a federal agency to confirm the obvious rule that employers who do not control the terms and conditions of unionized workers are not technically their employer?  Employers with employees who have formed a bargaining unit under the National Labor Relations Act (NLRA) to be represented for collective bargaining purposes are required to negotiate with the employees’ representative – i.e. the union.  For decades determining the identity of the “employer” was not that difficult.  Rightly so, the NLRB would look to see which company had direct and immediate control over the terms and conditions of the employees in the bargaining unit.  Normally that is not too difficult to figure out, but for many industrial, shipping, construction and other industries where you have multiple businesses working on a single project in coordination with one another it can be convoluted.  And for many years the NLRB would examine the reality of the situation to make the determination as to the identity of the employer required to bargain with the union.  If there were multiple employers with direct and immediate control over the same collective bargaining unit of employees then those employers would jointly be required to bargain with the union.

Along came the 2015 NLRB’s decision in Browning-Ferris, which upended decades of precedent. The Board in Browning-Ferris reimagined the joint employer standard weakening it to include any business which had “indirect control” or possessed a “reserved” right to exercise control over the bargaining unit employees’ terms and conditions of work. The practical result being that general contractors, businesses hiring staffing agencies, and businesses that work in coordination with other businesses on projects could foreseeably be considered an employer of union-represented employees and, therefore, required to bargain with a union even though the business never hired, doesn’t pay and likely never contemplated being an employer to this unionized group. 

Fast-forwarding to yesterday’s NLRB decision in Hy-Brand, the NLRB reversed the Browning-Ferris expansion of joint employment and reverted back to a less expansive understanding reinstating the rule that to be considered a joint employer for purposes of collective bargaining obligations the company must have direct and immediate control over the employees’ terms and conditions of employment.  The result should be that now (again) employers can work alongside, coordinate, indirectly supervise, and even hire as sub-contractors unionized employees with diminished fear that such ties will pull them into a joint-employment relationship with the employees’ more obvious employer.    

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