Joint Employment – are you at risk?

The joint employer doctrine remains in flux following the 2015 National Labor Relations Board (NLRB) ruling in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015), the 2016 US Department of Labor, FLSA Administrator’s Interpretation (No. 2016-1), and recent EEOC litigation positions, including the amicus brief filed in the Browning-Ferris appeal referenced below.

What remains consistent is that these agencies view joint employment in an increasingly broad, employee-friendly manner. The recent high-profile, $3.95 million settlement in a wage and hour California federal court class action involving claims of joint employer liability against McDonald’s by employees working for five franchisee restaurants highlights the impact of an expansive joint employer doctrine.

The Browning-Ferris decision, which found that waste management company Browning-Ferris jointly employed workers hired through staffing agency, Leadpoint Business Services, Inc., is under appeal (See, Browning-Ferris Industries of California, Inc., d/b/a/ Browning-Ferris Newby Island Recyclery v. National Labor Relations Board, USCA, Case Nos. 16-1028, 16-1063 and 16-1064).

At issue is the definition of control of the joint employment contract

One of the primary issues on appeal concerns the NLRB’s definition of “control” by one or more entities as including not only direct, but indirect, and, possibly, even the reservation of authority to exercise control, over the terms and condition of the end worker’s contracted assignment and related services. Browning-Ferris specifically contends that the NLRB joint employer standard is overly broad and inconsistent with applicable agency and case law.   At the March 9, 2017, oral argument hearing on the appeal, the Court’s questions reportedly suggested that it may be leaning in favor of Browning-Ferris in reversing the NLRB decision thereby reigning-in the expansive joint employer ruling. No appeal decision date has been issued but a decision is anticipated within the next several months.

A number of factors are involved with an employment relationship

While courts and administrative agencies consider a number of factors in determining whether an employment relationship exists, a company’s ability to control a worker’s actions is central to this inquiry. Ultimately, the Browning-Ferris appellate decision may provide some needed clarity on the joint employer standard. In the meantime, franchisor/franchisee, staffing/contingent worker services, contractor/subcontractor and other businesses engaged in the multi-layered management and provision of contracted labor need to be especially mindful of the current expansive agency and court application of the Browning-Ferris joint employment doctrine.
Newly-appoint United States Department of Labor, Secretary of Labor, Alexander Acosta, could also prove instrumental in determining the near-term landscape of the joint employer doctrine. Notably, just weeks after taking office, on June 7, 2017, Secretary Acosta announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors. In his announcement, he stated “Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. The department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.”

We will continue to provide updates as the dynamic landscape of joint employment and independent contractor classification continues to evolve under the President Trump administration.

ClearPath has partnered with Scherer Smith & Kenny LLP since 2001. We highly recommend this firm as they are easy to work with and very responsive. If you have any legal questions, you can contact Denis Kenny at dsk@sfcounsel.com, Ryan Stahl at rws@sfcounsel.com, or John Lough, Jr. at jbl@sfcounsel.com.

For all other questions about assessing your workforce or conducting a review of your current hiring processes, the ClearPath team can assist you.