The recent NLRB decision in Browning-Ferris Industries of California Inc. et al. v. Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, erased 30 years of precedent on joint employment. The case established an extraordinarily broad standard for joint employment and is the first of two cases on the subject. The decision has a direct impact for temporary staffing companies and those employers who use employees of temporary staffing companies. The major questions involve the second awaited decision; the NLRB is still deliberating whether McDonald’s Corporation is the joint employer of its franchisees’ employees.
In Browning-Ferris, the NLRB held that two or more entities would be deemed joint employers of the same employee if they “share or codetermine those matters governing the essential terms and conditions of employment.” The NLRB went on to hold that reserved authority to control terms and conditions of employment, even if not exercised, is sufficient for a joint employer finding. The factors to be considered in determining whether a joint employer establishes “essential terms and conditions of employment” include setting wages and hours; dictating the number of workers to be supplied; controlling scheduling; assigning work; and, determining the manner and method of work performance (including the issuance of operating instructions). Under Browning-Ferris, it makes no difference that the direction and control of aspects of employment is communicated directly by the putative joint employer or indirectly through the intermediary, which actually employs the subject workers.
Browning-Ferris involved a recycling facility that used workers furnished by a staffing company. The recycling facility managers directed the work of the staffing company’s employees. The recycling facility set the hours, directed the work force, and controlled the duties of the employees. The recycling facility also determined rates of pay, raises and was responsible for disciplining employees. The recycling center’s control over many aspects of the staffing company’s employees’ day-to-day activities was at the core of the NLRB’s decision.
Clearly, employers using temporary staffing agencies will be impacted by Browning-Ferris. Employees of staffing agencies may well be deemed “joint employees” for purposes of the NLRA in organizing drives.
How the decision could affect franchisors
The bigger question is how this possibly affects franchisors. While the NLRB has yet to decide the issue with McDonald’s, the Browning-Ferris decision foretells a potential nightmare for franchisors.
The very basis of franchising is unit replication from city to city and state to state that requires adherence to franchisor standards governing everything from the interior and exterior attributes, to how many employees should be used and what they should be paid.
Having said that, there are parts of the Browning-Ferris decision that hint at a different result for McDonald’s and other franchisors. First, the facts in the case demonstrate that the recycling center’s control of the staffing company’s employees was extensive, far more so than in a franchise setting. Second, the NLRB said that the franchisee/franchisor relationship was not before it in response to claims from the dissenting members that the new standard would harm franchisors.
There is also optimism that the NLRB will follow its own opinion from April of this year that said, even under the proposed standard in Browning-Ferris, a franchisor was not a “joint employer” because the franchisor played no role in the franchisee’s hiring, firing, disciplining or supervising employees and was not responsible for the wages, raises or benefits of the franchisee’s employees. In that instance, the NLRB opinion said that franchisor’s control over its franchisee’s operations was limited to insuring a standardized product and customer experience and protecting the quality of its product and brand.
At this point, employers who use staffing agencies and staffing agencies themselves are all that is covered in Browning-Ferris. The decision involving McDonald’s Corporation as a joint employer will determine how far the NLRB is prepared to extend the reach of “joint employment” for organizing purposes. Without question, the Browning-Ferris case will be taken to the appellate court, as will the McDonald’s decision when it is rendered.