The Joint Employer Doctrine Strikes Again

In a post last month (Serving Two Masters- Fourth Circuit Recognizes the Joint Employment Doctrine), we discussed the July 15th Fourth Circuit opinion of Butler v. Drive Auto. Indus. of Am, which made the joint employment doctrine the law of the Fourth Circuit. The Fourth Circuit adopted a “hybrid” test that embraced both the common law of agency and the economic realities of employment. In setting out a nine-factor test, the Court emphasized that the element of "control" remained the principal guidepost for determining whether multiple entities could be considered a plaintiff’s joint employers.

With that emphasis on control in mind, the Court highlighted three factors as the most important:

(1) which entity or entities have the power to hire and fire the putative employee is important to determine ultimate control;

(2) to what extent the employee is supervised is useful to determine the day-to-day, practical control of the employee; and

(3) where and how the work takes place is valuable to determine how similar the work functions of the plaintiff are compared to those of an ordinary employee.

Now the National Labor Relations Board has weighed in on the joint employer doctrine in its August 27th decision, Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (August 27, 2015). While the Butler case addressed whether Drive Automotive and a staffing company were joint employers of worker supplied by the staffing company for the purposes of Title VII employment discrimination, the NLRB addressed whether BFI and a staffing company were joint employers of the staffing company workers whom a Teamsters union sought to represent.

Just like the Fourth Circuit, the NLRB emphasized the element of control. The NLRB rejected any notion that control must be active, "direct and immediate." Instead, the NLRB ruled that a reserved authority to control may be enough: "the right to control is probative of an employment relationship – whether or not that right is exercised." The NLRB also stated that control exercised indirectly—such as through an intermediary staffing agency—would be sufficient to establish joint employer status.

Certainly you may never be confronted with a union-related, collective bargaining situation, but this recent NLRB decision together with the recent Fourth Circuit opinion demonstrate a determined judicial and governmental reaction to the rapid expansion of staffing and subcontracting arrangements, contingent employment, and temporary employment through employment placement agencies and temporary help services. It is becoming increasingly obvious that the courts and governmental agencies are confronting and will continue to confront what they perceive as an improper misclassification effort to skirt the laws governing the employer-employee relationship.

If you are an employer who has questions about the implications of the joint employer doctrine to your business, attorneys with the Sands Anderson Employment Team are available to answer your questions and assist you with this important issue.