News & Articles

DC Cir's Browning-Ferris NLRB Case Says No Chevron Deference for NLRB's C/L "Joint Employer" Test

01 / 14 / 2019

Browning-Ferris Indus. of Calf. v. NLRB, No 16-1028 (DC Cir. 12-28-2016)

In a significant majority 2-1 decision by a 3-member appeals court panel from the District of Columbia Court of Appeals, the appellate court ruled that the "right-to-control element" of the common law "joint employer" test is to include the consideration of both an employer's reserved right to control and its indirect control over the employees' terms and conditions of employment.  However, the NLRB was required to confine its analysis of "indirect control" consistent with the common law rules of agency that govern "joint employer" status.  The key aspect of this ruling might very well be found in the statement by the majority that employees of an independent contractor are not immune from being found to be the employees of the company that hired the contractor.

Browning-Ferris operates one of the largest recycling facitities in the world in California.  Those facilities use four conveyor belts--called "sort lines" to carry different materials that must be sorted to then recyle the rest.  Three types of workers were at issue in the case:  sorters, screen cleaners, and housekeepers.  Sorters, who remove and sort non-recyclable materials coming into the facility, are distinguished from the screen cleaners who clear out jams in the sort lines, and housekeepers who clean the areas around the sort lines.

Browning-Ferris, on its own, employs 60 workers who primarily work outside of the facility, such as loader operators, equipment operators, forklift operators, and sort-line equipment operators.  However, they also employ sorters, and have supervisors who oversee and manage the operations of its employees.  Except as to one of the sorters, it does not "employ" the other sorters needed, or screen cleaners or housecleaners, which are supplied by a staffing agency known as Leadpoint. 

Leadpoint and Browning-Ferris entered into a service contract, of an exclusive nature, called a Temporary Labor Services Agreement, to staff these sorting, screen cleaning, and housekeeping positions.  Approximately 240 workers were supplied.  Leadpoint also supplies its own onsite managers and supervisors to oversee sorters, screen cleaners and housekeepers.  While Leadpoint hires these workers, they must ensure that the sorters, screen cleaners and house cleaners it supplies meet certain conditions and qualifications required by Browning-Ferris in the contract.

Browning-Ferris contracts with Leadpoint, expressly setting forth in its contract, that Leadpoint has ultimate responsibility for disciplining the workers it provides.  However, on occasion, Browning-Ferris alerts Leadpoint supervisors to incidents they believed warranted disciplinary action, such as a worker seen passing a bottle of alcohol on the job.  

When the union sought to petition to have a new bargaining unit declared of the workers at the facility, it sought to include all workers who were employed by both Leadpoint and Browning-Ferris, as joint employers.  In other words, the union was already representing a separate bargaining unit consisting of the 60 workers directly employed by Browning-Ferris, including the one sorter employed by Browning-Ferris.  It then sought to create a new one to pick up the Leadpoint workers (but not the supervisors).  

At first, the director determined that Browning-Ferris and Leadpoint were not joint employers; that instead employees of Leadpoint alone comprised an appropriate bargaining unit.  In other words, that the evidence was insufficient to establish that Browning-Ferris controlled or "co-determined" matters governing the essential terms and conditions of the workers' employment, such as wages, benefits, hiring, discipline, termination, daily work responsibilities, and shift schedules.  The union then petitioned to have that decision reviewed, and the Board ruled in August 2015 that both Browning-Ferris and Leadpoint were, in fact, joint employers of the workers.

In ruling as it did, the NLRB board declared that it was reaffirming the 3rd Circuit's joint-employer standard under which 2 or more statutory employers are joint employers of the same statutory employees if they share or codetermine those matters governing the essential terms and conditions of employment.  In applying this test, the Board further announced that the inquiry is to be subdivided into two parts, with the first asking, whether there is a common law employment relationship with the employees in question, and if so, then whether the putative joint employer possesses sufficient control over the employees' essential terms and conditions of employment to permit meaningful collective bargaining.  It also stated that it would no longer require that a joint employer not only possess authority to control an employees' terms and conditions of employment but also actually exercise that authority.  In other words, the Board announced that it would consider both reserved control and indirect control as probative in the joint employer analysis.  

Browning-Ferris petitioned for review, and the Board cross-appealed.  

While the case was pending, the Board again changed course--it announced as part of a public rulemaking that it was going to find that in order to find joint employer status, an employer must possess and actually exercise substantial direct and immediate control over the employees' essential terms and conditions of employment of another employer's employees in a manner that is not limited and routine.

***********

On appeal, the majority of the panel ruled that since the Board's joint employer standard as it articulated was predicated on interpreting the common law, it was entitled to no deference since it was a pure question of law.  The appellate court ruled that the no deference rule announced in NLRB v. United Insurance Co. of America, 390 U.S. 254, 256 (1968) applies just as much to the common-law meaning of "employer" as it does to that of "employee."---both inquiries turn on pure questions of law about the scope of the traditional common-law agency principles.  

When applying the common-law analysis of "joint employer" status, the appellate court made clear that a court can factor in both an employer's authorized but unexercised forms of control and an employer's indirect control over employees' terms and conditions of employment.  In other words, the analysis is not limited or "woodenly confined" to indicia of direct and immediate control.  Instead, an employer's indirect control over employees can be a relevant consideration. However, when looking at indirect control, it must be confined to the indirect control over the essential terms and conditions of employment.  

Put quite simply, an agency is to apply its version of any test in a manner that "hews to the common law of agency."  The majority decision took issue with the dissenting opinion, and its statement that the employees of an independent contractor cannot be employees of the company that hired the independent contractor.   As it put it, the majority claims that controlling precedent from the Supreme Court finds that any such determination is not party of the joint employer analysis, citing to Boire v. Greyhound Corp.