On December 28, 2018, the D.C. Circuit Court of Appeals issued an opinion in the Browning-Ferris case. In this much anticipated decision, the Court of Appeals concluded that the National Labor Relations Board’s decision to enumerate a new joint employer test was a valid exercise of its authority. The Court of Appeals held, however, the NLRB failed to properly apply the newly created test. Consequently, while the Court of Appeals didn’t completely abrogate the NLRB’s ruling, the opinion frankly raises many questions respecting the future of the Browning-Ferris standard.
In the Browning-Ferris decision, the NLRB generally outlined a new joint employer test where two entities would be considered to be a joint employer if a common law employment relationship exists and if the joint employer possesses “sufficient control” over the “essential terms and conditions” of employment to permit “meaningful bargaining”. This test eliminated the long-standing precedent requiring an employer to have direct and immediate control over the subject employee. For a more detailed analysis of the original decision, and its various twists and turns, please see our previous blogs posts here, here and here.
The controversy surrounding what the Dickens the initial decision in Browning-Ferris means has festered since that time, with the concern from employers being particularly vocal. Specifically, employers have argued that the NLRB failed to establish what the “essential terms and conditions” of employment are, calling the language impermissibly vague and impractical. It didn’t help matters that the NLRB’s response to such concerns had been, essentially, “we’ll know an employment relationship when we see one.”
The Court of Appeals, in reviewing prior jurisprudence, concluded that the right-to-control standard is an established aspect of common-law interpretations of agency and that the analysis is not limited to the direct and immediate control an employer exerts over the employee. In analyzing this new standard versus long-held common-law agency decisions, the Court of Appeals found that cases of common-law agency focused not only on actual control over the employee but the “right to control” the employee as well. Thus, according to the Court of Appeals, the NLRB properly considered not only direct control but also control which is reserved and unexercised.
However, in remanding the case to the NLRB, the Court of Appeals held that the NLRB failed to reserve its application of the indirect control factor to those “essential terms and conditions” of employment. The Court of Appeals stated that the NLRB failed to differentiate between those aspects of indirect control relevant to status as an employer, and those aspects which are simply the by-product of common-law third-party contractual relationships.
The Court of Appeals further guided the NLRB in future actions by stating that, if it again finds Browning-Ferris to be a joint employer, it could “not neglect to (a) apply the second half of its announced test; (b) explain which terms and conditions are ‘essential’ to permit ‘meaningful collective bargaining’; and (c) clarify what ‘meaningful collective bargaining’ entails and how it works in this setting.” In the view of these commentators, the Court of Appeals’ guidance highlights the concerns raised by employer groups and provides hope that the NLRB will dedicate itself to further fleshing out the standards so as to provide meaningful guidance.
Unfortunately, one important question that the Court of Appeals failed to answer is whether indirect control, in and of itself, can establish joint employer liability. Given this continuing ambiguity, the franchise community will continue to be left with many questions as to whether franchisors will be considered the joint employer of their franchisees’ employees.
But this is not the only open question.
Perhaps the more important question is what will the NLRB do now? As is noted in our blog post here, the NLRB is currently in the midst of a rulemaking process to further develop and define the joint employer standard. The deadline for comments on this proposed rulemaking has been extended multiple times, suggesting both a large number of comments and disparate views. It is unclear whether the NLRB will rule on the remanded Browning-Ferris case prior to implementation of a new rule or wait for the completion of the rulemaking process. Either way, grab your popcorn, candy and pop, and settle in for more excitement and fireworks, NLRB-style.