In a monumental decision, the National Labor Relations Board (“NLRB”) held yesterday (July 29, 2020) that the retroactive application of an employee-friendly joint employer test would be “manifestly unjust.”
In deciding Browning-Ferris Industries, 362 NLRB No. 186 (2015), one of the most controversial decisions the NLRB has issued in the past decade, the then-existing NLRB created a new test to determine if an employer was a joint employer, then used that new test as grounds for making its decision as to the employer’s joint employer status.
The ruling issued yesterday reversed this decision, proclaiming it was unwarranted for the NLRB to have retroactively applied the new test to the employer. It is particularly noteworthy that the NLRB pointed to the abject unfairness of penalizing employers for following labor rules as they currently exist when the board stated, “[I]t would be manifestly unjust to fail to give [the employer] and similarly affected businesses reasonable warning before imposing such significant new duties and liabilities.”
The joint employer test created in Browning-Ferris made it possible for a business to be deemed a joint employer—thus, requiring the employer to legally recognize and bargain with the union of the associated entity—if the employer exhibits “indirect control” over a contractor’s or franchisee’s workers or reserves the ability to exert such control.
In February 2020, the NLRB overturned this test and reinstated the joint employer standard that had been in place prior to the Browning-Ferris ruling, which says a business is a joint employer only if it has “substantial direct and immediate control” over workers. This current test provides much more flexibility for employers by preventing employers from being forced to collectively bargain with contractors and franchisees whose employees it merely exhibits indirect control over.