D.C. Circuit Upholds Worker-Friendly Joint-Employer Definition

Allen Smith, J.D. By Allen Smith, J.D. January 2, 2019
D.C. Circuit Upholds Worker-Friendly Joint-Employer Definition

​The U.S. Circuit Court of Appeals for the D.C. Circuit approved the Obama administration's broad definition of joint employer on Dec. 28, 2018. The definition, crafted through a decision by the National Labor Relations Board (NLRB) in 2015, includes entities that retain the contractual right to control another company or have indirect control (i.e., through an intermediary). The decision, Browning-Ferris Industries of Calif. Inc. v. NLRB, means that contractors or franchisors might be considered joint employers of another company even if they don't exercise direct control over it, subjecting them to the other company's unionization drives and making them jointly liable for the other company's violations of the law.

The circuit court's late December decision raises questions about the extent to which courts will follow the Trump administration's anticipated rulemaking on who constitutes a joint employer—a rule that is expected to define joint employers as only those directly controlling other companies. We've gathered articles on the joint employer definition from SHRM Online and other trusted media outlets.

Appeals Court Cautions NLRB About Rule-Making

In upholding the board's 2015 Browning-Ferris decision, which currently remains in effect, the D.C. Circuit instructed the board that "the policy expertise that the board brings to bear on applying the National Labor Relations Act to joint employers is bounded by the common-law's definition of a joint employer." The D.C. Circuit determined that the consideration of indirect control when identifying joint employers is consistent with common law—law that is based on court rulings rather than statutes. "The board's rule-making, in other words, must color within the common-law lines identified by the judiciary," the D.C. Circuit panel said in a 2-1 decision. (JD Supra)

Source: NLRB and SHRM Online.

Where Does the Case Go from Here?

A full panel of the D.C. Circuit could wind up hearing the case or it could even end up at the Supreme Court. The D.C. Circuit panel ordered the case sent back to the NLRB to identify which specific factors lead it to conclude that Browning-Ferris was a joint employer. If it is sent back to the NLRB and not appealed to the full D.C. Circuit or Supreme Court, the Trump-appointed majority on the board might reject the Browning-Ferris test and adopt the direct control test that had stood in place for more than 30 years prior to the 2015 Browning-Ferris ruling. (Lexology)

Timing of Ruling Questioned

Judge A. Raymond Randolph dissented from the D.C. Circuit majority's decision, saying the opinion should not have been issued while the NLRB reviews its joint-employer standard. "I dissent as well because the majority opinion misstates the common law, misframes the questions in the case, and adds to the uncertainty the board's Browning-Ferris decision has generated," he wrote. However, writing for the majority, Judge Patricia Millett stated, "We see no point to waiting for the board to take the first bite of an apple that is outside of its orchard." The majority concluded, "Neither Browning-Ferris nor the dissenting opinion cites any case holding that consideration of indirect control is forbidden. Nor have we found any." (The National Law Journal)

[SHRM members-only toolkit: 
Complying with U.S. Labor Relations Laws in Nonunion Settings]

Rule-Making Is Still in the Works

The NLRB still plans to issue a rule on who constitutes a joint employer. The proposed rule provides that a joint employer must be a company that directly controls another entity's workers. That might include exercising direct and immediate control over the essential terms and conditions of employment of a contractor's or franchisees' employees. Dissenting from the proposed rule, NLRB member Lauren McFerran predicted, "If the majority's final rule could not be reconciled with the D.C. Circuit's Browning-Ferris decision, it presumably would not survive judicial review in that court." (SHRM Online)

Rule Headed to the Supreme Court?

Once a final rule is issued, the rule may be challenged in an appeals court other than the D.C. Circuit, assuming it requires direct control to be a joint employer. Another appeals court may be more receptive to the NLRB's rule than the D.C. Circuit might be. If the rule ultimately is upheld by another appeals court, the Supreme Court may choose to review the rule. But the NLRB also might back off its proposal to limit the joint-employer definition to only businesses that exercise direct control. (Bloomberg Law)


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