On August 27, 2015, in Browning-Ferris Industries of California, Inc., the panel (Board) heading the NLRB's judicial functions issued a new standard for determining whether multiple entities jointly employ workers who petition for union representation. The new standard maintains a focus on whether two or more entities share or codetermine matters governing essential employment terms and conditions. The standard blends the common-law control test with elements of a long-abandoned economic realities test, asking whether the putative joint employer possesses sufficient authority to directly or indirectly control employees' essential employment terms and conditions to permit meaningful collective bargaining. The new standard, portrayed by the Board as returning to a standard articulated by the Third Circuit from which the Board had since strayed, creates a multi-factor test in which no factor by itself is determinative of joint employment. (362 N.L.R.B. slip op. 186 (Aug. 27, 2015).)

In May 2014, the Board issued a notice and invitation in this matter soliciting amicus briefs on whether the Board should follow or replace the current standard it uses to determine whether two entities jointly employ workers who petition for a representational election (see Legal Update, NLRB Invites Briefs on Whether it Should Follow or Replace its Current Joint-employer Standard).

The NLRB's General Counsel and labor organizations submitted amicus briefs urging the Board to adopt a new joint-employer standard. Meanwhile, employer groups argued that the Board should maintain its current standard.

A majority of the Board (Chairman Pearce and Members Hirozawa and McFerran) decided to apply a new joint employment standard, portraying it as a revised standard that reaffirms and returns to a once-recognized Board standard. The Board held that:

Applying its new standard, the Board found that Browning-Ferris jointly-employed the employees of its contractor, Leadpoint Business Services. Specifically, the Board identified the following facts as demonstrating that Browning-Ferris's reserved authority to potentially control Leadpoint's workers and indirectly controlled their employment terms and conditions:

The Board also noted that:

Members Miscimarra and Johnson dissented, noting among other things that the majority's new joint employment standard:

The Board's decision in Browning-Ferris extends recent Board decisions making an entity's indirect control and unexercised ability or authority to control employment terms and conditions a sufficient ground for finding an employment relationship (see Legal Update, CNN Was Joint Employer of Subcontractor's Employees, Violated NLRA by Terminating Subcontracts with Antiunion Animus: NLRB; Legal Update, NLRB Finds FedEx Home Delivery Drivers Employees under New Independent Contractor Test, Rejects DC Circuit Independent Contractor Finding on Same Facts).

In CNN, the Board majority feigned that it was not changing the joint employer standard, but did so by implication. Now, in Browning-Ferris, the Board expressly changes the joint employer standard, but portrays the new standard as a revised one that reaffirms a previously recognized standard the Board strayed from for three decades.

As noted by the dissent, the Supreme Court has noted that Congress:

Although the majority does not expressly acknowledge doing so, it has grafted the economic realities test to the common law control test by:

The majority avoids referencing "economic realities" and instead writes of keeping the NLRB's joint employer standard in-step with current economic "circumstances."

The Board's decision makes it more likely that it will find larger entities to be joint employers of their contractors' employees because:

Update: On April 6, 2018, in Browning-Ferris Industries of California, Inc. v. National Labor Relations Board, the US Court of Appeals for the District of Columbia Circuit ordered that the motion to recall the mandate be granted (No. 16-1028 (D.C. April 6, 2018)).

In Browning-Ferris Industries of California, Inc. v. NLRB, the majority of a three-judge panel of the US Court of Appeals for the District of Columbia Circuit affirmed in part the NLRB's joint-employer standard, but granted in part the putative joint employer's petition for review. The DC Circuit ruled that the NLRB may, consistent with the common law of agency, consider both reserved authority to control and indirect control to be relevant factors in its joint-employer analysis. However, the court held that the Board failed to adequately articulate and apply the indirect-control element to the case's facts. The NLRB also failed to explain how it would determine "whether the putative joint employer possesses sufficient control over employees' essential terms and conditions of employment to permit meaningful collective bargaining," the second step in its joint employer analysis after it reviews the common law factors. The DC Circuit remanded the case to the NLRB for further proceedings consistent with its opinion. ( (D.C. Cir. Dec. 28, 2018).) Barring a petition for en banc review, the remanded case potentially provides the NLRB an opportunity to review and revise its joint-employer standard within the limits of the law of the case on a track parallel to its pending rulemaking. (See Legal Update, DC Circuit Upholds Part of NLRB's 2015 Joint Employer Analysis, Pans its Ambiguous Application to Facts.)