Court Hears Appeal of Expanded Joint Employer Liability Rule

By and | June 8, 2016

A California waste management company at the center of a closely watched case told a U.S. appeals court on Tuesday that the new U.S. labor board standard for “joint employment” is so broad and vague that it makes it impossible for employers to structure their business relationships with contractors.

Browning-Ferris Industries, a subsidiary of Republic Services Inc, argued the National Labor Relations Board’s joint employment standard robs employers of their due process rights in a brief filed with the U.S. Court of Appeals for the D.C. Circuit.

Many employers use contract labor in part to avoid the costs and complications that come with directly employing workers. But being categorized as a joint employer can stymie that effort, as they can be held liable for labor law violations and required to bargain with worker unions.

About a dozen business groups – from the U.S. Chamber of Commerce and the National Restaurant Association to the American Hospital Association and the National Association of Home Builders – plan to file briefs supporting Browning-Ferris’ position, as does Microsoft Corp.

Browning-Ferris is appealing an August 2015 NLRB ruling that found it was a joint employer of workers it hired through a staffing agency at its recycling facility in Milpitas, California.

Prior to that decision, companies qualified as joint employers of workers hired by another business if they had “direct and immediate” control over employment matters. The NLRB expanded on that by ruling joint employment can exist when companies have only indirect or unexercised control over contract workers’ employment conditions.

According to business groups, the ruling has the potential to disrupt a range of business-to-business relationships, including those that companies have with vendors, staffing agencies, subcontractors and subsidiaries.

“The real costs are the relationships that aren’t entered into, the business not being conducted and the services that aren’t being provided,” said James Plunkett, director of labor policy at the Chamber of Commerce.

Some groups have warned that it could upend the franchise model. An administrative trial began in March in a major case against McDonald’s USA Inc over its liability for labor violations at dozens of franchises across the country, which could clarify how the joint employment standard will apply to franchisor-franchisee relationships.

But many workers’ rights advocates and unions contend the NLRB’s decision was not a monumental shift and instead revived a longstanding definition of employment that emphasizes the right to control working conditions.

The case is Browning-Ferris Industries v. NLRB, U.S. Court of Appeals for the D.C. Circuit, Nos. 16-1028, 16-1063 and 16-1064.

(Reporting by Robert Iafolla and Daniel Wiessner, Editing by Alexia Garamfalvi and Tom Brown)

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