EXPANDED JOINT EMPLOYER RULES BACK IN PLAY
Back in 2015, the National Labor Relations Board in Browning-Ferris Industries, 362 NLRB No. 186 greatly expanded the definition of who could be an “employer” in so-called “joint employment” cases. In these cases, under the Browning-Ferris rule, many more third parties can have employer liability for actions taken by the actual employer. Franchisors, for example, that mandate certain uniforms for its franchisees might be deemed a “joint employer” of the franchisee’s employees, even though the franchisor never actually hires or fires the employees. Companies that hire independent contractors for services that place restrictions on the activities of the contractor’s employees are also at enhanced risk.
Last year, however, the NLRB in the Hy-Brand case, 365 NLRB No. 156, overturned the Browning-Ferris joint employer expansion. This returned us to a rule that required much more direct and immediate control by the third party for there to be employer liability for the third party. Recently, however, citing a potential conflict of interest in the Hy-Brand decision, the Hy-Brand case was vacated. This means, at least for now, a return to the expansive Browning-Ferris rule.
However, not all may be lost for a return to the more direct control rule. Congress may yet step in to legislatively overturn Browning-Ferris. U.S. HR 3441, the Save Local Business Act, has already passed the House of Representatives and has been sent to the Senate. Hopefully, the Senate will take this issue up soon. The level of uncertainty for employers and employees alike makes planning difficult. In the interim, businesses may wish to look very closely at their subcontractors to see if their relationships would potentially expose them to joint employer liability.