NLRB Returns to the Obama-Era Test of Joint Employment

February 28, 2018

At the end of 2017, as part of its effort to end certain Obama-era rules, the new Republican majority National Labor Relations Board overturned the joint employer standard established under Obama. According to the NLRB’s decision in Hy-Brand Indus. Contractors, Ltd. and Brandt Construction Co., in order to find a “joint employer relationship,” two entities must share actual control (verses a mere reservation of a right to control) the essential terms and conditions of employment (e.g. hiring, firing, supervision, compensation, etc). and that control must be “direct and immediate” verses merely indirect.


This week, the NLRB vacated its decision in Hy-Brand, after the inspector general issued a report condemning a member of the NLRB for improperly participating in the case. This means that the 2015 test established in the Browning-Ferris Industries of California, Inc. d/b/a BFINewby Island Recyclery decision, once again governs whether two entities constitute joint employers.


Under the Browning-Ferris test, two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law; and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the considers, among other factors, whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.


The reversion back to this more relaxed standard means that employers who employ workers through temporary agencies, or who utilize franchises or subcontractors to conduct business, are more likely to be viewed by the NLRB as a joint employer – that is until it changes its mind again!