Impact of NLRB’s Joint Employer Decision in Connecticut Still To Be Determined

My colleague, Jarad Lucan, who has been busy with his own labor cases, today returns with post about the latest from the NLRB.  There are many posts out there on the subject (here, here, and here, for example), so Jarad is going to touch on its impact for Connecticut employers.  

As you’ve no doubt read, the National Labor Relations Board, refined its test for determining whether two ostensibly separate entities can be viewed as joint-employers.  In its Browning-Ferris Industries of California, Inc. case, the Board concluded that Browning-Ferrris was a joint employer of workers supplied to it by a staffing agency that it contracted with.

According to the Board:

“Today, we restate the Board’s joint-employer standard to reaffirm the standard articulated by the Third Circuit in Browning-Ferris decision [A different case involving the same employer here]. Under this standard, the Board may find that two or more statutory employers are joint employers of the same statutory employees if they “share or codetermine those matters governing the essential terms and conditions of employment.” In determining whether a putative joint employer meets this standard, the initial inquiry is whether there is a common-law employment relationship with the employees in question. If this common-law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.

Central to both of these inquiries is the existence, extent, and object of the putative joint employer’s control. Consistent with earlier Board decisions, as well as the common law, we will examine how control is manifested in a particular employment relationship. We reject those limiting requirements that the Board has imposed–without foundation in the statute or common law–after Browning-Ferris. We will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. Reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry.  As the Supreme Court has observed, the question is whether one statutory employer “possesse[s] sufficient control over the work of the employees to qualify as a joint employer with” another employer. Nor will we require that, to be relevant to the joint-employer inquiry, a statutory employer’s control must be exercised directly and immediately. If otherwise sufficient, control exercised indirectly–such as through an intermediary–may establish joint-employer status.

But the outstanding question is: How big is this decision?

From our perspective, it’s still “to be determined.”

Certainly, it’s significant that the Board’s indication that it will no longer require that joint employers actually exercise the authority to control terms and conditions of employment, necessarily means that employers in business relationships such as the one at issue in the Browning-Ferris case may have joint-bargaining obligations that they do not even know exits and may be liable for unfair labor practices without engaging in any wrongdoing.

But this case will likely be appealed and it remains to be seen how much of this decision will be adopted by the courts.

Whatever the impact, the decision is significant enough that Congress is already discussing legislation to specifically address the decision.

Although the decision only applies to private sector employers, Connecticut’s State Board of Labor Relations looks to federal law for guidance in interpreting our State’s labor laws.

Thus, all employers in Connecticut, both private and public sector, should review this decision and any business contracts that may be impacted closely.  Independent contractor and franchise agreements, in particular, should be reviewed to be brought up to the latest in employment law. If you haven’t had your contracts renewed in the last decade, it’s probably time to do so now.”