NLRB Proposes New Rule on Joint Employer Standard

Q.  What is the current rule for determining whether two employers are considered to be “joint employers” under the National Labor Relations Act?

A.  On September 14, 2018, the National Labor Relations Board (NLRB) proposed a new regulation that would make it more challenging to establish joint employer status under the National Labor Relations Act. The proposed rule dictates that two entities will be joint employers only if each exercises substantial direct and immediate control over employees.

As we reported previously, in 2015, the NLRB significantly relaxed the standard for proving that two entities are joint employers in Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015). In Browning-Ferris, decided during the Obama administration, the NLRB ruled that entities could be joint employers even if one had only indirect, limited and routine control or the unexercised right to control employees’ terms and conditions of employment. The NLRB reversed course in December 2017 during the Trump administration, overruling Browning-Ferris and reinstating the standard for joint employer status that had existed previously – that entities are joint employers only if each has exercised direct and immediate control over employees. See Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017). The Hy-Brand ruling was short-lived, however. The NLRB vacated that ruling earlier this year due to the conflict of interest of one of the NLRB’s members who participated in the decision. In the meantime, a petition for review of Browning-Ferris is pending in the D.C. Circuit Court of Appeals.

Now, the NLRB seeks to establish a stricter joint employer standard by regulation. Doing so would add more permanence to the joint employer standard than interpreting it through case law, which often changes from one presidential administration to the next. The NLRB explained in its Federal Register notice that it would benefit from public comment on the joint employer standard “given the recent oscillation on the joint-employer standard, the wide variety of business relationships that it may affect (e.g., user-supplier, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, lessor-lessee, parent-subsidiary, and contractor-consumer), and the wide-ranging import of a joint-employer determination for the affected parties.”

The NLRB’s proposed rule enunciates the following test for joint employer status:

An employer, as defined by Section 2(2) of the National Labor Relations Act (the Act), may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision and direction. A putative joint employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.

The NLRB included 10 examples with the proposed rule “to help clarify what constitutes direct and immediate control over essential terms and conditions of employment.” For example, the NLRB concluded that the following scenario reflects one company’s direct and immediate control over another company’s employees: Company A supplies labor to Company B and, pursuant to the contract between them, Company A is required to pay a particular wage rate. In that situation, Company B exercises direct and immediate control over wage rates. In another example, a franchisor requires its franchisee to operate the franchisee’s store between specified hours. The franchisor does not exercise direct and immediate control over the essential terms and conditions of employment of the franchisee’s employees because the franchisor is not involved in scheduling the franchisee’s employees or in determining shift durations.

The NLRB’s proposed rule will now go through the time-consuming rulemaking process. As employers wait for the publication of a final rule, companies can minimize the risk of joint employer status by avoiding involvement in decisions regarding another company’s employees, including decisions regarding pay, hiring, discipline or termination.

–Susan K. Lessack

 

NLRB Flip Flops on Browning Ferris Standard for Joint Employment (Again)

Q.  What is the standard for determining whether two companies are joint employers?

A.  On February 26, the National Labor Relations Board (NLRB) decided unanimously to vacate its decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017) (vacated at 366 NLRB No. 26).  As we reported previously, in December 2017, the NLRB issued a 3-2 decision in Hy-Brand, in which it overruled the controversial joint-employer standard articulated in Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015). The Browning-Ferris decision had significantly relaxed the standard for proving that two entities are joint employers, ruling that entities could be joint employers even if one had only indirect control or the unexercised right to control employees’ terms and conditions of employment. The Hy-Brand decision returned to the pre-Browning-Ferris standard for finding joint-employer status, under which entities are joint employers only if each has exercised direct and immediate control over employees.

With this latest development, at least for now, the Browning-Ferris standard is in effect again, making it much easier for employees and unions to establish that two companies are joint employers.

For more information about this topic, please click here.

Susan K. Lessack

Employees’ Right to Representation During Employer Interviews

Q.  I am the HR Manager for a non-union workplace and we are investigating an issue involving employee misconduct. One of the employees whom I want to interview has requested that a coworker attend the interview as his “representative.” Can we say no?

A.  Yes!

While the NLRB has flip-flopped on this issue several times over the past few decades, the current ruling is that employees in non-union workplaces do not have so-called “Weingarten” rights to representation during company interviews.

The history of whether Weingarten rights to representation cover non-union employees is an interesting example of the effect of the shifting political landscape over time. Back in 1975, the United States Supreme Court held, in the case NLRB v. Weingarten, that an employer violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) by denying a unionized employee’s request to have a union representative present at an investigatory interview which the employee reasonably believed might result in disciplinary action.  Six years later, the NLRB extended Weingarten rights to non-union employees.  However, in a pair of subsequent cases in the mid-1980’s, the NLRB reversed this decision and ruled that Weingarten rights did not extend to non-union employees.

Fast forward to the year 2000 and a new set of competing decisions. In the case, Epilepsy Foundation of Northeast Ohio, the NLRB reversed its prior decision and instead found that non-union employees did indeed have a right to have a co-worker present during an investigatory interview that could lead to discipline.  However, just four years later, in IBM Corp., the NLRB changed direction again, ruling that Weingarten rights did not extend to non-union employees.  In the IBM Corp. opinion, the NLRB noted that an employee’s right to a representative was outweighed by the employer’s right to conduct prompt, efficient, thorough, and confidential workplace investigations.

Since the IBM Corp. case, the NLRB has rejected subsequent attempts to extend Weingarten rights to non-union workers.  In a NLRB Office of the General Counsel Advice Memorandum,  dated December 1, 2016 but not released until two months ago, the Office of the General Counsel urged Region 6 to use a pair of cases against General Electric Company to press the Board to extend Weingarten rights to unrepresented employees.  However, both cases were withdrawn.  Given the change in the make-up of the Board under the Trump Administration, it is unlikely that the Board will take up this issue anytime soon.

So, for the time being at least, employers of non-union workers can continue to conduct investigatory interviews without permitting employee representation. On the other hand, Weingarten rights of unionized workers remain intact.

— Tracey E. Diamond