El Paso

221 N. Kansas, Suite 1700
El Paso, TX 79901
Phone: 915.533.4424
Fax: 915.546.5360

Austin

919 Congress Ave., Suite 1305
Austin, TX 78701
Phone: 512.320.5466
Fax: 512.320.5431

Las Cruces

3800 E. Lohman Ave., Suite C
Las Cruces, NM 88011
Phone: 575.527.0023
Fax: 915.546.5360

Please read before contacting Kemp Smith:

Do not send or include any information in any email generated through this web site if you consider the information confidential or privileged. By submitting information by email or other communication in response to this web site, you agree that the communication does not create a lawyer-client relationship between you and the law firm and its lawyers and that any information submitted is not confidential and is not privileged. You further acknowledge that, unless the law firm subsequently enters into a lawyer-client relationship with you, any information you provide will not be treated as confidential and any such information may be used adversely to you and for the benefit of current or future clients of the law firm.

Area of Interest
Are You a Human:
To prevent spam on this page, please confirm that you are a person by clicking Yes.
Yes     No
search by Practices
search by Location

NLRB to Propose New Rule Related to Joint Employers and Overrule Controversial Browning-Ferris Decision

Today, the National Labor Relations Board (the Board) stated that it will propose a new rule that outlines the method by which two separate employers would be considered joint employers under the National Labor Relations Act (NLRA).

Normally, any violation of the NLRA by one employer affects only that employer unless those two companies constitute a joint employer. Delineating what it takes to become a joint employer, however, has proven difficult. Prior to 2015, the Board used a common law test in which one employer would be considered a joint employer if it retained sufficient control over the employees’ terms and conditions of employment, even if those employees worked for another employer. This test focused on whether the employer meaningfully affected matters relating to the employment relationship including hiring, firing, disciplining, etc. Under this test, the employer’s “limited and routine” supervision and direction was not sufficient to create a joint employment relationship. So, merely telling employees where to work and what to work on was not sufficient without more. And, merely retaining the right to tell employees how to perform their work was not sufficient either—the employer needed to actually use that right.

That changed in 2015, however, with the Board’s Browning-Ferris decision. The Board at that time (made up of a Democratic majority) overruled the common law test and held that a joint employment relationship could exist even if the employer did not actually exercise its authority to control the employee’s work. The Browning-Ferris decision held that merely retaining that authority was sufficient to form a joint employment relationship.

The result of that change was huge. Franchisors that did not actually tell employees how to perform their work could now be on the hook for the franchisees’ violations of the NLRA. The same applied to staff leasing companies and temporary employment agencies that placed employees with clients.

Now with a Republican majority appointed by the current administration, the Board has taken a major step to overrule Browning-Ferris and to prevent a future Board from resurrecting it. The Board will now propose regulations that would overrule Browning-Ferris and solidify the common law test into a regulation. According to the Board, the proposed regulation will find a joint employment relationship only if the employer possesses and actually exercises substantial, direct, and immediate control over the essential terms and conditions of employment and does so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority would not be sufficient. In other words, merely retaining the right to control an employee’s work would not result in a joint employment relationship.

The public will have 60 days to submit comments on the proposed rule, which will be published tomorrow, and the Board will then consider those comments, and issue final regulations in the future. Once that happens, it will be significantly more difficult for the Board to try to change the joint employment test in the future. That will provide predictability and allow employers to structure their operations (be it with a franchisee, staffing company, or temporary employment agency) knowing they can avoid being on the hook for another employers’ violation of the NLRA.

If you have any questions about the joint employment test, ensuring your company will not become a joint employer, or are interested in submitting comments on the proposed rules, please feel free to reach out to our Labor and Employment Department.

Clara (C.B.) Burns clara.burns@kempsmith.com
Michael D. McQueen michael.mcqueen@kempsmith.com
Charles C. High, Jr. charles.high@kempsmith.com
Abe Gonzalez abe.gonzalez@kempsmith.com
Gilbert L. Sanchez gilbert.sanchez@kempsmith.com
Scott Kendall scott.kendall@kempsmith.com