Back to Pre-BFI? NLRB Proposes a ‘Direct and Immediate’ Joint-Employer Standard

Approximately three years after the National Labor Relations Board (NLRB) turned its decades old joint-employer standard on its head in Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, on September 13, 2018, the Board proposed a rule to correct that mistake and return balance to the labor-management landscape. The Board does not often engage in rulemaking and usually makes policy through adjudication. At the same time, issuing a regulation on this vital matter has the advantage of providing long-lasting stability and predictability for all stakeholders.

The proposed rule corrects the broad and ambiguous joint-employer standard set forth in BFI and returns the Board to its traditional “direct and immediate” standard. The Board proposes the following joint-employer standard:

Under the proposed rule, an employer 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 proposed regulation also offers 10 “compare and contrast” examples to illustrate the new standard. For instance:

EXAMPLE 3 to § 103.40. Company A supplies line workers and first-line supervisors to Company B at B’s manufacturing plant. On-site managers employed by Company B regularly complain to A’s supervisors about defective products coming off the assembly line. In response to those complaints and to remedy the deficiencies, Company A’s supervisors decide to reassign employees and switch the order in which several tasks are performed. Company B has not exercised direct and immediate control over Company A’s lineworkers’ essential terms and conditions of employment.

EXAMPLE 4 to § 103.40. Company A supplies line workers and first-line supervisors to Company B at B’s manufacturing plant. Company B also employs supervisors on site who regularly require the Company A supervisors to relay detailed supervisory instructions regarding how employees are to perform their work. As required, Company A supervisors relay those instructions to the line workers. Company B possesses and exercises direct and immediate control over Company A’s line workers. The fact that Company B conveys its supervisory commands through Company A’s supervisors rather than directly to Company A’s line workers fails to negate the direct and immediate supervisory control.

Not surprisingly, Member Lauren McFerran—who was in the majority in BFI and dissented from the Board’s first attempt to correct the joint-employer standard—dissented from the proposal. Member McFerran essentially argues that BFI was decided correctly. Look for labor unions and worker advocates to mirror McFerran’s dissent in their comments.

Comments will be due to the Board on November 13, 2018, and reply comments will be due on November 20, 2018. The Board will then review the comments and make any necessary changes before issuing a final rule, but probably not until 2019. Litigation over the new rule will likely follow. Thus, the Board’s proposal today is another step in the joint-employer saga that will certainly have more chapters to follow. Given both the Board’s relative inexperience in the rulemaking process and its checkered history in attempting to promulgate rules, nothing is certain at this time.