Happy 2019 to everyone!
First, we begin the year with some good news: Kollman & Saucier is pleased to announce that it has been named a Tier 1 firm in Baltimore for both Employment Law – Management and Labor Law – Management by U.S. News – Best Lawyers® in 2019. As Best Lawyers explains, its ratings are based exclusively on peer review by other attorneys within the same geographical community and legal practice areas. Darrell VanDeusen, Eric Paltell, and Pete Saucier are likewise recognized by Best Lawyers as among the top labor and employment attorneys in Maryland.
Now, the . . . interesting news. Just before the new year, the latest chapter in the NLRB joint employer saga unfolded. Centered around Browning-Ferris Industries, the dilemma facing the Board is what standard to apply when analyzing whether a second entity may be considered a joint employer along with the worker’s direct employer. This important issue most strongly affects both industries with franchising arrangements and companies that use temporary staffing agencies, and it may even impact consumer relationships with contractors.
Section 2 of the National Labor Relations Act explains that a covered “employer” “includes any person acting as an agent of an employer,” but it does not further define the term “employer” (or “joint employer,” for that matter). 29 U.S.C. § 152(2). Since 1982, though, there has been a general consensus that joint employment requires that the entity at issue “exert[s] significant control over the same employees” and, in so doing, “share[s] or co-determine[s] those matters governing essential terms and conditions of employment[.]” NLRB v. Browning-Ferris Indus. of Pa., Inc., 691 F.2d 1117, 1124 (3d Cir. 1982).
So, what is “significant control”? It depends. By 2002, the Board took the position that control must be both (1) actually exercised by the entity (as opposed to authority that was merely possessed (by contract or other arrangement), but not exercised by, the entity) and (2) “direct and immediate,” not indirect.
That changed in 2015. In an adjudication (i.e., the agency equivalent of a single court case between two parties) involving Browning-Ferris, the NLRB explained that it would consider both reserved control and indirect control as relevant to the joint employment inquiry, and stated that even authority that was possessed but not exercised could make an entity a joint employer.
The Board initially reversed course in a 2017 adjudication after the change in its composition, before a subsequent recusal resulted in a 2-2 ruling that had the effect of the 2015 standard remaining in place – at least for the time being.
Last May, the Board opted instead to begin the rulemaking process (i.e., creating new regulations that affect all parties) to clarify the joint employer standard. Notice of the proposed rule was announced on September 14, 2018 and adheres to the 2002 standard. At the same time, Browning-Ferris and the Board were before the D.C. Circuit on appeal from the 2015 ruling. Complicated, right?
On December 28, 2018, the D.C. Circuit issued a 2-1 decision that clarified the “lines” within which the Board may “color” through its regulations. Judge Patricia Millett explained for the majority that although “Congress delegated to the Board the authority to make tough calls on matters concerning labor relations,” the contours of the joint employment doctrine are judicially defined through common law.
The Court’s holding has two parts: (1) indirect control by an employer (including an authorized or reserved right of control) can be relevant to the joint-employer analysis; but (2) to be relevant, the control must be those that “share or co-determine those matters governing essential terms and conditions of employment. . . . By contrast, those types of employer decisions that set the objectives, basic ground rules, and expectations for a third-party contractor cast no meaningful light on joint-employer status.” The Court then remanded the case to the Board to “color within these lines.”
Where does things go from here? It is guesswork at this point, but it is likely that the Board will complete its rulemaking and then apply its finalized standard to Browning-Ferris and other future parties. There will then likely be efforts to appeal the Board’s ruling to the D.C. Circuit and then, potentially, the Supreme Court. In any event, we will follow this news as it unfolds throughout the year.