Joint Employer Standard Overturned!

The National Labor Relations Board (NLRB) rendered a great decision last week! It overturned its liberalized joint employment standard announced two years ago in Browning-Ferris Industries of Calif.

That decision overturned decades of precedent, and held that one does not only qualify as a joint employer by exercising actual control over the employees of another, but also by exercising indirect control or potential control. Many (including me) feared that if this standard survived judicial scrutiny, it could prove fatal to many small businesses, including franchisees.

That risk, however, is no more. In Hy-Brand Industrial Contractors, Ltd. the NLRB expressly overturned Browning-Ferris:

“We overrule Browning-Ferris and restore the joint-employer standard that existed prior to the Browning-Ferris decision. Thus, a finding of joint-employer status requires proof that the alleged joint-employer entities have actually exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control), the control must be “direct and immediate” (rather than indirect), and joint-employer status will not result from control that is “limited and routine.”

Ironically, the Board concluded that two employers at issue in the case — a contractor and its sub — were joint employers because the general contractor exercised actual control over the essential employment terms of its sub’s employees.

These two issues were the bane of well-intentioned employers for the past few years. Boeing and Hy-Brand will make it significantly easier moving forward for all employers to manage their businesses via well-reasoned, facially neutral work rules, and via arms’-length dealings with other employers.

This is great news for employers!


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