NLRB Overrules Browning-Ferris, Reintroduces Limits on Joint Employer Liability

NLRB Overrules Browning-Ferris, Reintroduces Limits on Joint Employer Liability

Just days after the National Labor Relations Board’s general counsel sent a memo to the US agency’s regional directors advising them to pull back on the controversial “joint employer” standard adopted by the Obama administration, the board’s new Republican majority overturned the ruling on which that standard was based, the Hill reported late on Thursday:

In a 3-2 decision, the Republican-controlled board overruled the board’s previous 2015 decision in a case, known as Browning-Ferris, which found a company to be considered a joint-employer with a subcontractor if it has “indirect” control over the terms and conditions of employment or has the “reserved authority to do so.”

In a statement, NLRB said in all future and pending cases two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised direct and immediate control over essential employment terms of another entity’s employees.

Restricting the joint employer standard was high on the policy wishlists of several employer groups, particularly the National Restaurant Association, which said it harmed the franchise model. The Trump administration was expected to act on this soon after the new Republican members of the board were seated in August and September. Labor Secretary Alexander Acosta, a longstanding critic of the Obama administration’s expanded definition of joint employers, rescinded Obama-era guidance on joint employer liability in June. Legislation has also been introduced in Congress to write the narrower definition into the National Labor Relations Act.

The joint employer rule was not the only one the NLRB overturned on Thursday, however. John Zappe at TLNT explains that they also reversed a 13-year-old ruling on whether facially neutral workplace rules can be found to actually violate the NLRA:

In setting the new standard, the majority wrote: “The Board will no longer find unlawful the mere maintenance of facially neutral employment policies, work rules and handbook provisions based on a single inquiry, which made legality turn on whether an employee ‘would reasonably construe’ a rule to prohibit some type of potential Section 7 activity that might (or might not) occur in the future.”

Since the Lutheran Heritage Village-Livonia NLRB decision in 2004, the standard for deciding a violation was whether employer policies that didn’t expressly prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities could be ‘reasonably construed’ by an employee to prohibit their exercise of NLRA rights.