Joint employer standard overruled, NLRB reinstates previous test
The National Labor Relations Board made a change Thursday that could affect thousands of restaurant operators nationwide, according to news releases.
The 3-to-2 vote by the board puts down a Browning-Ferris Industries action from 2015, which could hold employers responsible for labor law violations committed by their subcontractors. The Obama-era decision said a company should be considered a joint-employer with a subcontractor if it has "indirect" control over the terms and conditions of employment or has the "reserved authority to do so."
Thursday's decision reversed that ruling. The board wrote:
"We find that the Browning-Ferris standard is a distortion of common law as interpreted by the Board and the courts, it is contrary to the Act, it is ill-advised as a matter of policy, and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations."
As a result, joint employer status now requires proof that those companies identified as joint employers actually did and do have joint control over an individual's employment, rather than simply the right to do so. Further, the employee must be directly controlled by the identified joint employers, rather than just “limited” areas of control.
The decision now applies to all pending and future cases involving so-called joint employers like restaurant corporations and their franchisees.
In response, the nation's largest body representing the interests of restaurant brand leadership, the National Restaurant Association, affirmed the decision saying it overrules a standard that worked against "small businesses."
"We applaud today's decision from the National Labor Relations Board," Said NRA EVP for Public Affairs Cicely Simpson in an emailed statement. "The 2015 Browning-Ferris ruling stacked the deck against small businesses and inserted uncertainty into day to day operations. Today's decision restores years of established law and brings back clarity for restaurants and small businesses across the country."
Topics: Operations Management