In the latest installment of protracted litigation involving Browning-Ferris Industries (“BFI”) and the appropriate standard for determining joint-employer status under the National Labor Relations Act, the U.S. Court of Appeals for the District of Columbia Circuit on July 29 vacated a National Labor Relations Board decision in BFI’s favor. The standard is significant, as companies that are joint employers may be held jointly responsible for any unfair labor practices and collective bargaining obligations related to the jointly employed workers.
In the overturned decision, the Board in 2020 – then under Republican control – held that BFI was not a joint employer with staffing company Leadpoint. The case was on remand at the Board after the circuit court issued a ruling in 2018 in which it assessed a joint-employer test established by the Democrat-controlled Board in 2015. The test called for considering not only an employer’s direct control over another company’s employees but also any indirect control and any unexercised, reserved right to control. The court in 2018 generally upheld the standard but remanded the case back to the Board to (1) rearticulate the indirect-control element of the standard in a way that would conform with the common law, (2) “meaningfully apply” and explain the reserved-control element, and (3) consider whether retroactive application of the standard to BFI was proper. The Board declined to address the first two items and, reversing its earlier findings, concluded that BFI was not a joint employer and that the 2015 test should not have been retroactively applied to BFI.
The Board found that retroactive application would be “manifestly unjust.” It explained that, in the three decades prior to the 2015 ruling, the Board held that an entity must exercise direct and immediate control over essential terms and conditions of employment of another entity’s employees to be a joint employer and that the 2015 standard overruled this longstanding, clear rule of law.
The case made its way back up to the circuit court in the present case. The court ruled that the Board made “multiple overlapping errors in its retroactivity analysis” in its 2020 decision. The court disagreed with the Board’s characterization of the pre-2015 standard as being static over 30 years and found that the Board in its 2020 ruling overlooked the longstanding role of indirect control in the Board’s joint-employer inquiry over the years. The court also disagreed with the Board’s finding that retroactive application of the 2015 standard to BFI would be manifestly unjust, noting that there was no evidence that BFI had actually relied on the prior standard. The court again remanded the case back to the Board – a Board which has again changed control since its last ruling in the matter.
In addition to the BFI litigation, the Board has addressed the joint-employer standard in rulemaking. Consistent with its 2020 ruling in this case, the Board the same year issued a final rule providing that a company is a joint employer status only it actually exercises substantial direct and immediate control over essential terms and conditions of employment of the other employer’s workers. That rule became final in 2020 and remains in place today. However (you guessed it), the current Democrat-controlled Board has announced its intent to engage in new rulemaking on the issue very soon.