Yesterday afternoon, the NLRB issued a decision in Hy-Brand Industrial Contractors that caused a collective sigh among employers. The decision rolls back the joint employer standard to what it was before Browning-Ferris Industries, 362 NLRB No 186.
The Browning-Ferris decision was greeted with alarm by most employers, especially franchisers and franchisees, as it made it easier for employees to claim that two entities were joint employers.
Specifically, Browning-Ferris held that two entities could be joint employers even where they never exercised joint control over essential terms and conditions of employment. It was enough that there was an agreement between the parties where they reserved the right to exercise joint control.
The Hy-Brand decision explicitly overrules Browning-Ferris. Interestingly, the decision discusses in some detail the negative impact Browning-Ferris had on franchisers.
Now the test for determining whether an employer has exercised joint control goes back to what it was before Browning-Ferris was decided in 2015. Two entities will be found to be joint employers where:
- joint control is exercised;
- the control has a “direct and immediate” impact on employment terms; and
- where such control is not merely “limited and routine.”
Franchisers should still be careful when setting up controls over payroll processes or scheduling of employees of franchisees or when they have reserved the right to address discipline with the franchisee’s employees. The mere fact that an employer reserves the right to weigh in on disciplinary issues will no longer mean that they could be a joint employer. However, if that right to weigh in on discipline is frequently exercised, then there might be a finding of joint employment. In other words, wade carefully.