Articles Client Alerts / 10.12.2015

UPDATE: Congress aims to Reverse Browning-Ferris

Authored by: Robert Bowes with Alex E. Jones

Capitol Hill has been busy attempting to reverse the new “joint employer” standard established in the recent National Labor Relations Board (“NLRB”) decision Browning-Ferris Industries of California (“Browning-Ferris”). An overview of Browning-Ferris can be found here. In the decision, the NLRB reasoned that if an employer indirectly controls or simply has the authority to control the hiring, firing, supervising and disciplining of employees, then it may be deemed a joint employer even if no such control is exercised.

The far reaching implications of this decision (e.g., increased collective bargaining obligations on the part of employers) prompted members of Congress to introduce the Protecting Local Business Opportunity Act (H.R. 3459, S. 2015) (the “Act”).  The Act would amend the National Labor Relations Act  (“NLRA”) to clarify that “two or more employers may be considered joint employers for purposes of [the NLRA] only if each shares and exercises control over essential terms and conditions of employment and such control over these matters is actual, direct, and immediate.” This would revive the pre-Browning-Ferris joint employer standard, which traditionally required an employer to exercise direct control over employees to be considered a joint employer.

Congress is currently debating the merits of the bill. Earlier this month, 400 small business owners and lobbyists met with 124 lawmakers to discuss their concerns regarding Browning-Ferris, as well as their support for the Act. Members of the House Subcommittee on Health, Employment, Labor and Pension held a hearing on the bill with NLRB members and business owners to discuss the uncertainties the Browning-Ferris decision creates for business owners. When one NLRB Member emphasized that employer relationships would be analyzed on a case-by-case basis, a business owner quipped, “[h]ow can I run a company on a case-by-case basis?”

To add to the uncertainty, a draft internal memo from OSHA revealed that it, too, may follow the NLRB’s lead and expand its own definition of “joint employers.” The memo stated, “two entities will be determined to be joint employers when they share or codetermine those matters governing the essential terms and conditions of employment.” This is essentially the standard announced in Browning-Ferris, and if adopted by OSHA would subject more employers (such as franchisors and general contractors) to increased liability for workplace safety violations.

It is still not clear whether the Act will pass Congress. The bill was introduced in both houses of Congress, and currently there are 45 co-sponsors in the Senate and 60 co-sponsors in the House. Support may not be strong enough for the bill to pass, so businesses need plan accordingly in the event Browning-Ferris is not reversed.