Friday, August 28, 2015

NLRB Alters Definition of Joint Employer

By a 3-2 vote in a case involving Browning-Ferris Industries of California, the National Labor Relations Board voted yesterday to “revisit and revise” the standard for determining whether two affiliated but legally separate entities are “joint employers” for purposes of collective bargaining.  This ruling directly affects parent corporations and subsidiaries, as well as franchisors and franchisees, among other business relationships.  In determining whether two entities are joint employers, the question, the Board said, is “whether the putative joint employer possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining”.  While this articulation of the standard is not new, its implementation by the Browning-Ferris majority is a significant departure from the previous standard.  “We will no longer require”, the Board said, “that a joint employer not only possess the authority to control terms and conditions of employment, but also exercise that authority”.  In other words, the potential for authority over the terms and conditions of employment of a franchisee’s employees by a franchisor will be sufficient to find joint employer status even in the absence of evidence that the franchisor has ever exercised that authority.  

The ruling undoubtedly will be challenged in the courts.  The dissenting opinion by Members Miscimarra and Johnson is extensive and no doubt will be cited by those seeking to overturn the NLRB’s ruling.  For now, however, franchisors like McDonald’s can expect that they will become embroiled in the organizing and bargaining activities of the employees of their franchisees, regardless of the steps the franchisors make take to distance themselves from any control over the franchisees’ responses to those activities.  

Whether this decision will find its way into the rulings of the Illinois Labor Relations Board and the Illinois Educational Labor Relations Board is unknown.  But it is interesting to note that the ILRB has taken the position that supervisory status cannot be established by the merely possession of supervisory authority in the absence of evidence that such authority actually has been exercised.  Will the ILRB change its position on joint employer status to conform to the NLRB position and, if so, will it also change its position on supervisory status?  Or will it determine that there is no parity of reasoning, thus permitting it to exercise situationally specific logic?