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National Labor Relations Board Expands Definition of “Joint Employer”

September 3, 2015

Decision Could Prove Very Problematic for Construction Firms

The National Labor Relations Board issued a disappointing but anticipated decision on Thursday that relaxes the standard for determining when two companies constitute “joint employers” under the National Labor Relations Act.  As reported here, AGC submitted a joint amicus brief with other employer groups in the case last year.  The brief urged the NLRB to maintain the current standard, under which separate entities are considered joint employers only if they share direct control over, or co-determine, essential terms and conditions of employment.  The brief also urged the Board to refrain from relaxing the standard to the point where indirect or potential control would be enough.  Consistent with the current Board’s penchant for expanding employer liability, the NLRB changed the standard to require consideration of whether an employer has exercised indirect control over terms and conditions of employment through an intermediary, or reserved the right to do so. 

The question in the case, Browning-Ferris Industries of California, Inc., was whether Browning-Ferris Industries and a company it used to supply labor are joint employers of the supplied workers or whether the labor supplier is the sole employer.  Companies that are joint employers may be held jointly responsible for any unfair labor practices and collective bargaining obligations related to the workers.  The Board concluded that the two companies were indeed joint employers based on its findings of indirect and direct control that Browning-Ferris possessed over essential terms and conditions of employment of the supplied workers as well as Browning-Ferris’s reserved authority to control such terms and conditions.

AGC will provide further guidance after completing a full analysis of the case.  An appeal is expected but not certain at this time.

For more information, please contact Denise Gold at goldd@agc.org or Jim Young at youngj@agc.org

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