DC Circuit Court Upholds NLRB’s 2015 Browning-Ferris “Indirect” Control Joint Employer Test and Signals Intent to Limit NLRB’s Pending Joint Employer “Rulemaking” Process

On December 28, 2018, the United States Circuit Court of Appeals for the District of Columbia (the “DC Circuit”) issued its long-awaited opinion concerning the appeal of the National Labor Relation Board’s 2015 ruling on the “joint employer” test. (See, https://www.cadc.uscourts.gov/internet/opinions.nsf/A1D3A01EDFAB1B8A852583710055207A/$file/16-1028-1766137.pdf) “Joint employment” in essence occurs when two or more individuals or companies are involved with a worker and both may meet the statutory or common law destitution of an employer for the same worker.

The court essentially upheld the Board’s 2015 decision broadly defining the joint employer test as including both an (1) employer’s “reserved” right to control and (2) its exercise of “indirect” control over employees’ terms and conditions of employment (for example, through a third-party staffing company or other intermediary) as components of a joint employer relationship between one or more hiring entities. Consideration of “indirect” control differs from the proposed standard included in the Board’s pending rulemaking process for the joint employer definition. In explaining its rationale, the Court noted: “The Board’s conclusion that it need not avert its eyes from indicia of indirect control—including control that is filtered through an intermediary—is consonant with established common law. And that is the only question before this court.”

In plain English, this means that the Court “affirmed” the Board’s 2015 decision but “remanded” or sent the case back to the Board for further consideration of the appropriate components and features of “indirect” control under the joint employer test.

The implications of this ruling remain unclear for several reasons. Notably, the Board’s proposed joint employer rulemaking remains open for public comment until January 28, 2019 (https://www.nlrb.gov/news-outreach/news-story/nlrb-further-extends-time-for-submitting-comments-on-proposed-joint-0). So, should the Board issue a version of the joint employer doctrine as a result of the rulemaking process which materially differs from the standards articulated in this DC Circuit decision, further litigation will almost certainly occur. We will continue to follow this matter as it unfolds.

Scherer Smith & Kenny LLP remains available to guide you through these and other nuances in California’s dynamic and ever-changing employment law arena. For additional information, please contact Denis Kenny at (dsk@sfcounsel.com), Ryan Stahl at (rws@sfcounsel.com), or John Lough, Jr. at (jbl@sfcounsel.com).

Written by Denis Kenny