Bustos Law Firm

BROWNING-FERRIS JOINT EMPLOYER TEST

In Employment on January 10, 2018 at 9:48 AM

In a recent 3-2 vote, the National Labor Relations Board overturned the Browning-Ferris Test, a commonly known test whereby a company and its contractors or franchisees could be deemed a single joint employer, even if the company has not exerted overt control over the workers’ terms and conditions. In the Browning-Ferris case, the board determined that Browning Ferris was a joint employer of recycling workers provided by a staffing agency at a Browning Ferris owned recycling facility. In Browning-Ferris, the board revised the standard to include “indirect control” or the ability to exert such control.

The board’s latest ruling now returns the test back to a “direct and immediate” control standard analysis. Commenting upon their ruling, the board’s majority stated: “[a] finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”

The significance of this result is that an employer is less likely to be held liable as a joint employer under the NLRB, because indirect control alone is no longer sufficient to establish liability.  Thus, in the event an entity works with and supervises employees who are construed as part of a collective-bargaining organization, and those employees are employed by another entity, so long as the “non-employer” entity does not exercise “direct and immediate” control over the terms and conditions of the employees of other entity, such as hiring and firing, then the “non-employer” entity is unlikely to be considered a joint employer for purposes of liability under the National Labor Relations Act.

This standard is similar to standards for determining joint-employer liability under the Fair Labor Standards Act, as demonstrated in the Tenth Circuit, “(1) whether the alleged employer has the power to hire and fire employees, (2) supervises and controls employee work schedules or conditions of employment, (3) determines the rate and method of payment, and (4) maintains employment records.”  See Jensen v. Redcliff Ascent, Inc., No. 2:13-CV-00275-TC-EJF, 2014 U.S. Dist. LEXIS 82478 at *6-8 (D. Utah June 17, 2014) (discussing tests applied by various circuits); Baker v. Flint Eng’g & Constr. Co., 137 F.3d 1436, 1440-41 (10th Cir. 1998).  And Fifth Circuit, “whether an individual or entity is an employer, the court considers whether the alleged employer: ‘(1) possessed the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.’”  Williams v. Henagan, 595 F.3d 610, 620 (5th Cir. 2010).

Thus, the takeaway for employers to remember is that under the NLRB and FLSA, liability typically attaches to any entity, regardless of whether it is the “hiring-employer,” when that entity exercises control over determining the terms and conditions of employees’ employment.

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