In a 21-page majority decision — followed by a 28-page dissent — the NLRB stripped away what it said were additional requirements that had been grafted onto a joint-employer standard endorsed by the Third Circuit in 1982, ruling that exercising direct, immediate control over workers was no longer a requirement for being deemed a joint employer.
The 3-2 decision, which concluded that Browning-Ferris Industries of California Inc. was a joint employer of workers provided by a staffing agency at a BFI recycling plant, inspired strong reactions both from proponents who saw it as a step toward greater accountability for employers and from critics who said it created uncertainty, threatened franchise and contract relationships, and jeopardized jobs.
"The issues attached to it are big ones, so big that as we sit here there's already talk about legislation in Congress to address this specifically," said Fisher & Phillips LLP partner Steven Bernstein. "It just raises a hornet's nest of questions that will be dealt with not by the board, but by the 26 NLRB regions that get to use their discretion to interpret all this."
With all the attention given to Thursday's decision and the speculation about its potentially sweeping impact, some things seem to have gotten lost in the shuffle. Here are four things observers ought to be aware of as the dust settles after the bombshell decision.
There's No Direct Circuit Court Appeal
Many attorneys following the Browning-Ferris case expect the company to keep fighting the NLRB and say the battle could have the legs to get up to the U.S. Supreme Court. Seyfarth Shaw LLP's Stuart Newman, an attorney for the company, said in an email Friday that the company was "considering all its options."
But because Browning-Ferris was a representation case, the company cannot directly appeal Thursday's ruling, lawyers said. If the company wants to challenge the decision in federal appeals court, it must wait for the union election votes from the workers the NLRB deemed jointly employed on Thursday to be counted.
If the workers opt for representation and a union is certified, Browning-Ferris can then engage in a technical refusal to bargain with the union. When that refusal to bargain charge goes up to the NLRB and the labor board deems the refusal to be an unfair labor practice, then that decision can be appealed to a circuit court, which can consider the employer's argument that it's not a joint employer.
"All avenues have to be exhausted before you get to the appeals court," Bernstein said. "The parties have to go through this process."
It's also possible that the appeal that tees up the new joint-employer standard for circuit court review could come from an employer other than Browning-Ferris. Even if Browning-Ferris decides against continuing the fight, another company that ends up being labeled a joint employer under the same standard might feel the time and expense of an appellate fight is worthwhile.
The standard the board espoused in the Browning-Case will be fertile ground for disputes, Bernstein said.
"It's going to create a whole new wave of potential litigation and appeals," he said. "We know the courts have sometimes reined in the agency, and this could be one of those times."
There's Another Big Staffing Co. Case on the NLRB's Plate
The Browning-Ferris decision involved Teamsters Local 350's efforts to organize workers supplied by a staffing agency for a recycling plant in California. And there's another big case involving staffing firm employees on the NLRB's docket, which gives the Democratic board a chance to topple a 2004 NLRB ruling and make it easier to organize groups of workers that include staffing agency employees.
The NLRB put out a call for briefs in July in a case called Miller & Anderson Inc., which stems from a sheet metal workers union's bid to represent a unit of workers employed by electrical and mechanical contractor Miller & Anderson and Tradesmen International LLC.
The NLRB currently requires consent from employers in order to have a multiemployer bargaining unit, but that requirement could be done away with by an eventual ruling in Miller & Anderson.
The NLRB asked for input on whether the board should abandon its 2004 Oakwood Care Center decision, which said solely employed and jointly employed workers cannot be in the same unit without employer consent, and go back to its stance in 2000's M.B. Sturgis Inc. decision, which said that consent isn't required.
Seyfarth Shaw's Marshall Babson, a former board member, said the Miller & Anderson case had a lot of significance, particularly when viewed in tandem with Browning-Ferris.
"I think there is some clear relationship between the two, and if the board were to change the [consent] rule, as they're obviously contemplating, it would produce a powerful one-two punch," Babson said.
Increased Union Activity Is Expected
Both employee-side and management-side attorneys said they expected the Browning-Ferris decision to have an impact on union organizing, and that labor groups would step up their efforts now that the ruling is on the books.
"I certainly think that unions are going to leverage this ruling and you're going to see a lot more claims for joint-employer status being brought," said Serrins Fisher LLP partner Liane Fisher, who represents workers.
"It's not just a legal development, it's an organizing tactic that's been opened up like never before," Bernstein said.
The Browning-Ferris decision made clear that the previous standard was too stringent and allowed many companies to circumvent legal liability and collective bargaining obligations by arguing that they didn't have an employment relationship with workers, according to Fisher, who said the ruling demonstrated the NLRB's disfavor for arrangements they see as skirting labor law.
"User" firms, the term the NLRB used to distinguish Browning-Ferris from its labor supplier, are expected to face intensified bids by unions to bring them to the bargaining table.
"Unions are going to step up their efforts to bargain with user firms that they believe are also joint employers," Fisher said.
It's Bad News for McDonald's
Though the Browning-Ferris ruling didn't involve a franchiser-franchisee relationship, and it remains unclear exactly how the board will apply its new standard in cases with different circumstances, Tuesday's ruling didn't bode well for McDonald's, Fisher said.
The fast food giant is facing NLRB complaints launched in December that took aim at both McDonald's USA LLC and McDonald's franchisees, alleging that the "joint employers" violated the rights of workers who took steps to try to improve their working conditions that included participation in nationwide protests.
There are a lot of similarities between the arrangements companies have with contractors and subcontractors and franchiser-franchisee relationships, Fisher said.
"Many of those factors and much of the analysis is the same," she said. "The Democratic majority will probably rule in a similar fashion."
NLRB General Counsel Richard F. Griffin Jr. has taken the position that McDonald's qualified as a joint employer under the more restrictive, pre-Browning Ferris test, Babson pointed out.
"We'll have to see how this board majority applies the test," Babson said. "I think it's a potential problem for everyone — not just McDonald's but all franchisers and anyone who enters into contractual relationships."
McDonald's didn't immediately respond to queries about Browning-Ferris on Friday.
--Editing by Katherine Rautenberg and Brian Baresch.
