NLRB Creates New Joint Employer Standard Impacting all Employers

Analysts say the ruling holds a special significance to fast-food and construction companies, which rely heavily on franchise employees and contract work. Therefore, Browning-Ferris could not insulate itself from the legal responsibilities it had to the workers by creating a subcontractor employer.

Rep. Byrne agreed, saying, “Once again the National Labor Relations Board has taken the side of big labor over what is in the best interest of our nation’s small business owners and employees”. The Union claimed that Browning-Ferris was the joint employer of Leadpoint’s employees.

In a ruling that redefines the concept of employment in the United States, the National Labor Relations Board yesterday issued its much-anticipated decision in Browning-Ferris Industries of California, Inc. d/b/a Newby Island Recyclery, 362 NLRB No. 186 (2015). Fortin said the NLRB decision will hurt her workers, because it will raise her businesses’ costs, leaving “less money in the pockets of employees”.

In a statement following the release of the decision, the Board said it found that BFI was a joint employer with Leadpoint because of the “indirect and direct control that BFI possessed over essential terms and conditions of employment of the employees supplied by Leadpoint as well as BFI’s reserved authority to control such terms and conditions”.

As part of its involvement with the coalition, IFA will ask members of Congress to support legislation that would codify the decades-long and widely accepted definition of what constitutes a joint employer. “The Board’s decision uproots 30 years of labor standards and imposes unnecessary barriers to and burdens on the contractor and subcontractor relationships throughout our industry”. By acknowledging this relationship, the Board allows workers to sue the corporation, which has more resources, rather than a subcontractor that often has less. Nor will the Board require that an employer’s control is exercised “directly and immediately”. They noted that the new test “will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have”, and predicted “a sea change in labor relations and business relationships”. “We will no longer be in charge of the business we worked so hard to build”.

Brian R. Garrison, a partner of Faegre Baker Daniels LLP in Indianapolis, said any business operating on a franchise model, using workers employed by a staffing agency, or using workers employed by a subcontractor or vendor will feel the effect of the decision. What about the private equity firm that owns the janitorial contractor….it may control the contractor’s board of directors, dictate changes in its benefit plans and other employee policies, and decide whether the firm should pursue certain business opportunities.

The Coalition to Save Local Businesses hopes so – its lobbying strategy is centered around the impact the NLRB’s decision will have on independently owned franchisees.

Carey, and other businesses and organizations worry the ruling means their employees could unionize under the larger umbrella of the franchising company, forcing franchisees to bend to their demands. Their locally owned and run businesses have the flexibility to deal with individual employees’ needs as they arise.

Congressman Bradley Byrne (R-AL1) and the House Education and the Workforce Committee listened to testimony from Birmingham-based labor law attorney Marcel Debruge and small business owner Steve Carey during a hearing held in Mobile last week detailing how the NLRB’s decision will change the business landscape.