Unwarranted Outcry: NLRB Browning-Ferris Decision Re-establishes Employer Responsibility

The sign for the National Labor Relations Board is seen on the building that houses its headquarters in downtown Washington, July 17, 2013.

A recent decision by the National Labor Relations Board, or NLRB, that attempts to more clearly define who is a joint employer—and therefore responsible for bargaining and respecting workers’ rights—has triggered the predictable conservative backlash. However, a closer look at the facts indicates just how unwarranted this backlash is. Unfortunately, these latest criticisms are merely the continuation of conservative attacks on the NLRB and its efforts to uphold workers’ rights.

The most recent spark for these attacks is an August decision by the board, which held that Browning-Ferris Industries, a waste management and recycling firm, was a joint employer with its staffing provider, Leadpoint Business Services, a staffing agency. Some business and other critics have argued that the NLRB decision will mean the end of franchising and contracting as we know it. Just two weeks after the decision, a number of Republicans and a handful of Democrats sponsored bills in both the House and the Senate to reverse the effects of the decision. Supporters of these bills have threatened to attach them as riders on must-pass appropriations bills—those bills needed to fund the government.

In reality, this response is overblown. The NLRB’s decision, while quite important for workers, is fact specific and merely marks a return to the historical definition of “joint employer” under common law. The restoration of this standard means that workers will again have a meaningful opportunity to bargain with the employer who controls their terms and conditions of employment and be protected against labor law violations by those who are employers both in name and in action. Supporters of workers’ rights need to hold firm and oppose any attempts to use the appropriations process to undermine this sensible and well-reasoned NLRB decision.

Details of the Browning-Ferris case

Browning-Ferris Industries uses Leadpoint Business Services to supply most of the workers in its Newby Island facility in California. Browning-Ferris employs approximately 60 workers directly and hires at least 240 workers from Leadpoint to sort recycling material. When the Leadpoint workers at the facility moved to organize a union and bargain collectively in June 2013, they wanted to do so not just with Leadpoint but also with Browning-Ferris, the company that determines many of their working conditions.

Applying the legal test then in effect, an NLRB regional director ruled that Browning-Ferris was not a joint employer along with Leadpoint. The union appealed, and the full NLRB reversed the regional director’s decision. The full NLRB reasoned that both Browning-Ferris and Leadpoint were employers of the workers because the companies “share or codetermine those matters governing the essential terms and conditions of employment,” both directly and indirectly.

Comparing Browning-Ferris to McDonald’s

The NLRB has another high-profile joint employer case pending before it involving McDonald’s. Workers participating in the “Fight for $15” campaign to raise the wages of low-paid workers filed numerous unfair labor practices charges alleging that McDonald’s USA LLC should be held jointly responsible along with its franchisees for illegally firing, threatening, or otherwise punishing employees for their involvement in “Fight for $15” activities. The NLRB Office of the General Counsel authorized complaints on several of these charges even before the Browning-Ferris decision, agreeing that in some instances, McDonald’s Corp. should be held accountable as a joint employer under then-existing law.

The McDonald’s case has not yet gone to trial before an NLRB administrative law judge; the trial is scheduled to begin in January 2016. Once the administrative judge rules, either side can seek review by the full NLRB.

The Browning-Ferris case differs from the McDonald’s case because the former involved a staffing agency, not a franchisor-franchisee relationship. But critics’ response to the Browning-Ferris decision—largely focusing on the potential effects for franchising—seems to assume that McDonald’s will be found to be a joint employer in the pending litigation.

A return to a long-standing definition of employment

Opponents have been quick to decry the Browning-Ferris decision as one that breaks dramatically from the current standard and is beyond the scope of the NLRB’s authority. Contrary to these assertions, the Browning-Ferris decision returns to a long-standing joint employer definition developed under common law. The common law definition of employment stems from the mid-19th century, when English courts developed the “right-to-control” test based on whether one person possessed authority to control the economic activity of another person. American courts adopted this standard, and the long-standing American common law governing employment relationships includes the familiar right-to-control test.

In the 1964 case Boire v. Greyhound Corp., the U.S. Supreme Court confirmed that it was up to the NLRB to determine whether an alleged employer “possessed sufficient control over the work of the employees to qualify as a ‘joint employer.’” In the Greyhound case and others over the next two decades, the NLRB and courts determined joint employer status under the National Labor Relations Act, or NLRA, by analyzing whether alleged employers “share, or codetermine, those matters governing essential terms and conditions of employment,” consistent with common law principles.

The NLRB narrowed the definition of joint employer in the 1984 decisions in Laerco Transportation and TLI Inc., to require employers to not just have the “right” to control but also to “exercise” that right through direct and immediate control over employees. According to the current board, these cases “marked the beginning of a 30-year period during which the Board—without any explanation or even acknowledgement and without overruling a single prior decision—imposed additional requirements that effectively narrowed the joint-employer standard.” The NLRB’s 2015 Browning-Ferris decision is a return to the common law standard that prevailed for decades prior to 1984. Future decisions will be based on this new standard but will be decided on the individual facts in each case.

The Browning-Ferris decision is fact based and comparable to other employment laws

Critics also contend that the Browning-Ferris decision will make franchising and contracting relationships all but impossible. But neither the specifics of the case nor historical experience with the NLRB or other employment law supports these claims.

First, the Browning-Ferris case did not involve any form of franchising arrangement, and the decision’s joint employer finding was based on the specific facts in that case. Leadpoint is a staffing firm that provided most of the employees who regularly worked in the Browning-Ferris plant, not a franchise of the recycler. As Ann Marie Lofaso, a law professor at West Virginia University, testified before the U.S. House of Representatives Education and the Workforce Committee regarding proposed legislation to roll back the NLRB’s decision, Browning-Ferris could arguably qualify as a joint employer under either the new or previous formulations of the board’s standard. She based her opinion on the fact that Browning-Ferris exercised considerable control over the terms and conditions of employees supplied by its staffing firm. Either way, both new and old standards are highly dependent on the specific details of the relationship between a lead employer and a franchisee or contractor in each particular case. Already since the Browning-Ferris decision, an NLRB regional director has ruled in another case that an asbestos firm was not a joint employer with the staffing agency that supplied its workers.

Second, franchising and contracting models were created and implemented throughout the United States under traditional American common law and the historical NLRB standard. They can certainly continue under the NLRB’s reaffirmation of that standard.

Finally, the new NLRB standard is in keeping with other employment laws—employment laws under which contractors and franchisors have been able to operate and thrive. Many other laws—from the Fair Labor Standards Act, or FLSA, to the Occupational Safety and Health Act, or OSHA—call for similar case-by-case, fact-specific determinations about whether multiple companies are jointly responsible for compliance with the law. For example, determining joint employment under the FLSA involves examining whether a worker is economically dependent on the business of the employer using an economic realities test. Similarly, OSHA has a multiemployer policy that holds the creating, exposing, correcting, or controlling employers responsible for hazardous conditions and generally considers temporary workers hired by staffing agencies to be joint employers.

In summary, despite the misinformation spread by its critics, the Browning-Ferris decision does not introduce a completely new definition of joint employment. Traditional common law standards, including the right to control, are legal principles that employers have navigated in the past under a variety of other workplace laws and will be able to navigate again. The current NLRA standard is an important means of preserving workers’ rights to collective bargaining, workplace protections, and decent wages and benefits in today’s economy. These essential protections ensure that workers have access to a good standard of living and are critical to strengthening and expanding the middle class.

Danielle Corley is a Special Assistant for the Economic Policy team at the Center for American Progress Action Fund. David Madland is the Director of the American Worker Project at the Action Fund.