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D.C. Circuit Overturns NTSB's 'Joint Employment' Liability Rule

In a 2015 case involving Browning-Ferris Industries Inc., the National Labor Relations Board revised its standard for determining when two or more organizations are considered joint employers for the purposes of federal labor and employment law. When companies that are otherwise considered employers "share or codetermine those matters governing the essential terms and conditions of employment," the board held, those companies are both liable for employment-related issues.

This was an effort to hold companies responsible for workers they contract for through temporary employment agencies or who are hired by franchisees. As the board noted at the time of its decision, over 2.87 million American workers were employed by temporary staffing agencies in August 2014. The 2015 standard was meant to apply the law to a changing economic landscape.

Under the 2015 standard, companies could be required to bargain with unions for temp workers' or employees of franchisees. They could also be held liable for any violations of federal labor law involving those workers.

Attempts to overturn the 2015 standard have been ongoing

The 2015 standard was controversial, and business groups such as the U.S. Chamber of Commerce made changing it a top priority. In December 2017, the NLRB overturned the standard but was forced to reverse itself two months later when it was discovered that one Trump appointee had a conflict of interest.

In September, the NLRB issued a proposal that would restore a previous standard for determining joint employment relationships. The rule is moving through the regulatory process and could be adopted by June.

Appeals court agrees in principle, rules 2015 standard too broad

Now, a panel of the U.S. Court of Appeals for the D.C. Circuit has ruled 2-1 that the indirect control described in the 2015 standard was not properly defined by the NLRB. The panel recognized that indirect control might indeed be enough to create a joint employment relationship. However, it ruled that the definition of indirect control used in the 2015 decision was too broad. It ordered the NLRB to reconsider the definition.

The board has changed its make-up since the 2015 standard was put into place. The five-member board is currently made up of three Trump appointees and two others, meaning it is unlikely to define indirect control as the 2015 board would have done. It is more likely to rely on the previous definition of joint employer until its own proposed rule goes into effect.

If your organization is concerned that it may be considered a joint employer with a staffing agency or franchisee, we recommend discussing your situation with an experienced employment law attorney.

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