Against precedent dating to 1984, a 3-2 NLRB majority redefines “joint employer” in a decision favoring an International Brotherhood of Teamsters local aiming to extend representation from a recycling station bargaining unit—equipment operators and companion staff employed by the facility’s owner—to a subcontractor whose employees perform waste sorting and related services.
The agency determines in Browning-Ferris Industries of California 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 share or codetermine matters governing the essential employment terms and conditions. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.
Stakeholders in building and construction, a sector spanning 2 million-plus individual proprietorships likely subject to the Board determination, responded sharply to the decision. “The NLRB abandoned a standard that has been recognized for decades, and expanded the definition of a joint employer to now hold businesses liable for workers they do not even employ, potentially even putting them on the hook for legal ramifications,” said Missouri builder and NAHB Chairman Tom Woods. “The new standard no longer requires that a business ‘directly and immediately’ control a workforce run by another business, to be named a joint employer, but rather expands the definition to include indirect control.
“Building a home requires multiple specialty trade contractors such as roofers, electricians and framers. [S]mall builders can’t afford to have a large full-time staff to include all of these trades, so they contract with specialty trades based on project needs.” The joint-employer determination, he adds, subjects builders and other small businesses to “unprecedented Board jurisdiction.”
Associated Builders & Contractors Vice President of Government Affairs Geoff Burr also weighed in with a statement on Browning-Ferris. The ruling, he noted, “imposes unnecessary barriers to and burdens on contractor and subcontractor relationships throughout our industry. [It] threatens both responsible contractors who have established sound workplace protocols and subcontractors by deeming them joint employers of the subcontractors’ employees. Contractors may find themselves vulnerable to increased liability making them less likely to hire subcontractors, most of whom are small businesses, to work on projects.”
NLRB Chairman Mark Pearce and Members Kent Hirozawa and Lauren McFerren issued the decision. Dissenting Members Harry Johnson III and Philip Miscimarra contend that the redefinition of joint employer “will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing. Our colleagues are driven by a desire to ensure that the prospect of collective bargaining is not foreclosed by business relationships that allegedly deny employees’ right to bargain with employers that share control over essential terms and conditions of their employment.”
Among major problems with that objective, Members Johnson and Miscimarra add, “No bargaining table is big enough to seat all of the entities that will be potential joint employers under the majority’s new standards. We believe the new test impermissibly exceeds our statutory authority.”