NLRB decision on joint employers could have broad impact, lawyer says

By Jamie Kelly | Jul 13, 2016

WASHINGTON – A case before the District of Columbia Court of Appeals could have a wide-ranging impact on whether companies are considered joint employers of workers and therefore must engage in collective bargaining under federal labor law, according to an employment lawyer.

A 2015 ruling by the National Labor Relations Board in the case of Browning-Ferris Industries of California held that companies that use workers from staffing agencies are so-called “joint employers” of those workers and are bound by laws covering union organization and collective bargaining. The company has filed an appeal, and late last month the National Federation of Independent Business filed a brief with the court claiming the decision overturns precedent and throws business owners into confusion.

“The potential impact is quite far-reaching and rests on how the regional directors and general counsel of the NLRB apply the new standard day-to-day,” Charles S. Birenbaum, an employment lawyer with Greenberg Traurig LLP, told the Northern California Record. “For example, if a lending company requires approval of a labor contract as a condition of financing a transaction, it could suddenly become a joint employer and be required to bargain with its debtor-customer. There are many more examples of how this new rule will impact commerce. In sum, many contend that this new rule will burden commerce, interfere with corporate transactions, create conflicts between employers, create liability for companies that did not think they had it in the past, and cause companies to lose protections under federal labor law based on their neutral status to a labor dispute by now becoming a joint employer.”

In its Browning-Ferris decision, the NLRB said that it would broaden its scope when deciding whether a company was a joint employer, and look at whether contractual agreements gave a company the ability to control the terms of an employee’s work or whether a company can use an intermediary to do so. In its brief, the NFIB claimed that the board’s decision reversed 30 years of precedent.

The NLRB has broad jurisdiction, but courts are willing to rule against administrative agencies under certain circumstances, Birenbaum said.

“The NLRB’s jurisdiction to interpret the National Labor Relations Act is quite broad,” he said. Congress anticipated that the NLRB would interpret and apply the statute. The courts generally defer to administrative agency interpretations of the law unless a party shows that the agency action exceeded its authority, acted in an arbitrary or capricious manner, or violated a law. The NLRB interpretations tend to swing back and forth between Democratic-controlled and Republican-controlled boards. The appeal challenging the Browning-Ferris decision contends, among other things, that the decision is arbitrary and conflicts with the statute and intent of Congress.”

If courts rule in favor of the NLRB, companies will have to change hiring arrangements and more, Birenbaum said.

“The impact will be on companies big and small,” he said. “As to staff leasing, temporary employment, outsourcing, and other contingent work force services, one solution is not to use a third-party provider. Tighter indemnifications between parties and cost shifting in staff leasing contracts might become necessary. Companies may have to be somewhat creative in union matters. For example, they may coordinate their goals ahead of time and delegate authority to common agents to handle union negotiations.”

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