Ever since August 27, 2015, employers that use staffing agencies, employ subcontractors or have franchisees have faced significant uncertainty over the extent to which they constitute employers according to the United States Department of Labor. On that day, the National Labor Relations Board issued its decision in Browning-Ferris Industries of California. The Browning-Ferris decision overturned recent precedent regarding when two or more entities would qualify as joint employers.
The debate over when a business qualifies as a co-employer actually goes back several decades and even centuries. Before legislation on the issue, the common law established standards for who constituted an employer and permitted findings that multiple entities might fit that definition for a single employee. Recently, the Department of Labor and the National Labor Relations Board have oscillated between one test requiring direct control over the terms and conditions of employment to make a finding of joint employer status and another test permitting a finding of joint employer status when only indirect control over the terms and conditions of employment exists.
The Browning-Ferris decision met with considerable push-back from a wide variety of businesses immediately after it was issued. Multiple court cases and attempts to lobby Congress to overturn the ruling failed to make significant progress towards that goal. Many employers worry about the situation had hoped that a new administration might finally do away with the rule.
Unfortunately, that hope only added to the chaos and uncertainty of the situation. The National Labor Relations Board, staffed by new appointees by this point, issued a decision overturning the new joint employer test in December 2017 in an unrelated case known as Hy-Brand Industrial Contractors, Ltd. Like Browning-Ferris, Hy-Brand was decided by a 3-2 margin. Shortly after that, though, an ethics complaint alleged a conflict of interest meant one of the NLRB members should not have taken part in the decision. This invalidated the Hy-Brand decision. As if this did not create enough confusion, an appellate review of the Browning-Ferris decision had already been stopped and return to the NLRB for reconsideration under the Hy-Brand ruling.
As things stand, the Browning-Ferris decision continues to stand. At the same time, that decision will be under assault by both appellate attorneys representing employers and the current administration at the Department of Labor for the next few years. The NLRB has indicated a strong desire to overturn the decision as soon as they can in a way that will actually last at this point. Recent press releases indicated that the Board might use notice and comment rulemaking to address the issue rather than adjudicatory cases. The notice and comment rulemaking procedure may take considerably more time to complete, though it also avoids disputes regarding conflicts of interest.
This whole mess puts employers in a difficult situation; legal uncertainty makes it difficult for companies to make decisions aimed at protecting their interests and avoiding future litigation. For now, employers must review their relationships with their workers and be clear.