The NLRB has issued a landmark decision changing its current standard for assessing “joint employer” status in both unionized and non-union workplaces. This is significant, because, even if the company is not the actual employer of workers, the company may be required to bargain with a Union and held liable for unfair labor practice charges if found to be a “joint employer.” As a result of the decision, two or more entities can now be considered as “joint employers” if: (1) the entities are both employers within the meaning of common law; and (2) the entities share or codetermine matters governing the essential terms and conditions of employment. In the case, the NLRB addressed whether Browning-Ferris Industries of California, Inc. (BFI) was a joint employer of the workers supplied by the staffing agency, Leadpoint Business Services (Leadpoint). While it was already determined that Leadpoint serves as an employer, the Union challenged an earlier decision that concluded BFI was not a joint employer.

In siding with the Union, the NLRB dismissed the old standard that required a joint employer to “not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority.” The NLRB noted that “reserved authority” to control employment terms and conditions—even without exercising that authority—is relevant in determining whether an entity is a joint employer. The NLRB explained that, while employment matters such as “hiring, firing, discipline, supervision, and direction” are inherently considered essential employment terms and conditions, sharing control over other mandatory employment terms and conditions, such as “dictating the number of work to be supplied, controlling schedule, seniority, and overtime; and assigning work and determining the manner and method of work performance,” are also relevant and will be considered.

Emphasizing that BFI “directly and indirectly” exercised control over the essential employment terms and conditions of the workers involved, the NLRB ultimately found that BFI was a joint employer. The NLRB considered multiple factors in reaching its decision, including: BFI’s possession of control over who Leadpoint could hire as workers; retention of the right to “require that Leadpoint ‘meet or exceed [BFI’s] own standard selection procedures and tests;” control over the processes that “shape the day-to-day work;” authority to assign specific tasks that needed to be completed and dictate timing of employees’ shifts; and a significant role over the workers’ wage determination.

The NLRB’s decision is expected to have an immediate impact on both leasing and franchise employment situations, including the Board’s allegation that McDonald’s is liable for franchisees’ unfair labor practices. Indeed, franchisors should pay careful attention to the new “joint employer” standard in structuring their franchisee relationships. All companies should conduct an in-depth analysis to identify possible “joint employer” problems and reduce risk. Once again, the Board has broadened the scope of the NLRA.