United States: NLRB Upends Joint-Employer Status Test: Browning-Ferris Ruling Exposes Businesses To Joint-Employer Status For Contract And Temporary Employees

Brief Summary

On August 27, 2015, the National Labor Relations Board ("NLRB") upended its decades old joint-employer status test concluding that a joint-employer relationship exists where separate business entities "share or codetermine those matters governing the essential terms and conditions of employment." This "refinement" of the NLRB's 1982 joint-employer status test is a significant shift in doctrine, which will likely embolden labor unions and employee advocates across the nation and threaten businesses who hire contract and temporary workers with increased risk for collective bargaining and employment related claims. 

Basic Facts

The underlying dispute in the case arose at a recycling facility owned by Browning-Ferris Industries of Milpitas, California. Browning-Ferris retained Leadpoint Business Services to provide temporary and contract workers for a variety of tasks at the facility. Leadpoint and Browning-Ferris entered into a temporary services agreement that named Leadpoint as the sole employer and denied any joint-employer relationship between Browning-Ferris and Leadpoint. Under the agreement, Leadpoint had control over hiring employees and employee discipline and Browning-Ferris retained the right to reject any employee or to "discontinue the use of any personnel for any or no reason."

In July of 2013, the Teamsters Local 350 ("Teamsters") filed a petition under the National Labor Relations Act seeking to represent employees at the Browning-Ferris facility and requesting a determination on whether Leadpoint and Browning-Ferris were joint employers. Applying the joint-employer standard from an earlier 1982 decision, the NLRB regional director found that Leadpoint was the sole employer of the proposed unit's members and directed an election to be held shortly thereafter. The Teamsters filed a request for review, claiming that the regional director ignored important evidence and misapplied NLRB precedent. The Teamsters also requested a reconsideration of the NLRB standard for evaluating joint-employer relationships. The NLRB requested amicus briefs on the issue, a signal that it would likely re-evaluate its 1982 joint employer standard developed in the NLRB v. Browning-Ferris Industries of Pennsylvania Inc. case.

Despite Browning-Ferris claiming no involvement in employee discipline, the NLRB found that Leadpoint employees had been disciplined at the request of Browning-Ferris management, a fact the NLRB found significant. The temporary services agreement also provided Leadpoint the leeway to set wages for its employees, but then gave Browning-Ferris a veto power over any wages that exceeded what Browning-Ferris paid its own employees engaged in similar positions. Browning-Ferris also determined the shift lengths and break intervals of employees while Leadpoint was responsible for deciding which employees would be staffed on any particular shift. Additionally, Leadpoint employees were required to sign a waiver acknowledging they were ineligible to participate in any benefits plan offered by Browning-Ferris.

Claiming a return to the traditional test developed by the Third Circuit, the NLRB stated that a joint-employer relationship exists where "two or more entities...are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment." This interpretation overrules the prior standard illustrated in other decisions by eliminating the requirement that an employer actually exercise control over the terms and conditions of employment. Under this new joint-employer standard, an employer could be found to be a joint-employer by merely possessing the underlying power to control any terms and conditions of employment, regardless of whether it ever chooses to exercise such power.


Applying this new standard, the NLRB overruled the regional director's finding against a joint-employer relationship between Browning-Ferris and Leadpoint. The NLRB found that Browning-Ferris met the common law definition of employer, and it was "indisputable," according to the NLRB, that the company not only had a right to control the terms and conditions of employment, but that it had done so, both directly and indirectly. Touting the apparent importance of the decision, the NLRB confirmed that the ruling will modify the legal landscape for all employers covered by the National Labor Relations Act.

Earlier NLRB Joint-Employer Standard

Previously, the NLRB joint-employer standard originated in a 1982 Third Circuit case, NLRB v. Browning-Ferris Industries of Pennsylvania Inc., in which the court held that a joint-employer relationship exists where separate business entities "share or codetermine those matters governing the essential terms and conditions of employment." Over the years, the NLRB gradually narrowed that standard, eventually deciding that the critical factor to joint-employer status is "whether a putative joint employer's control over employment matters is direct and immediate." Absent the exercise of direct and immediate control, the employer would be free from collective bargaining, labor law violations, or other employment related claims.

California Joint-Employer Standard

Though still very disconcerting for California businesses, the Browning-Ferris decision is similar to legislation that Governor Jerry Brown helped write into California law earlier this year. Effective January 1, 2015, under Labor Code § 2810.3, California employers will "share" responsibility and liability with labor contractors with respect to the "payment of wages" to contracted temporary workers assigned to the employer, regardless of the employer's control of, or participation in the payment of wages to the assigned employees. The business must also "share" liability for its labor contractor's unlawful failure to secure valid workers' compensation coverage for assigned temporary workers. The stated basis for the law is to prohibit employers from shifting to their labor contractors legal duties or liabilities under workplace safety provisions with respect to assigned workers provided by the contractor.

The NLRB's ruling in Browning-Ferris and Labor Code Section 2810.3 are a significant departure from California's earlier common law joint-employer theory of liability. Under that approach, an employer could be liable for claims for unpaid wages of contracted workers only if a worker established that an actual employment relationship existed both with the labor contractor that employed the temporary worker and with the company to which the worker was assigned to perform contracted services. This typically was accomplished through, among other things, a showing that the company to which the worker was assigned exercised significant, direct control over the worker's hours, wages or working conditions, a showing that would be necessary under the NLRB's earlier 1982 joint-employer test.

Now, because of Section 2810.3, and rulings like the NLRB's Browning-Ferris determination, a California company may be deemed jointly liable for certain violations along with its third-party labor contractor, regardless of the amount of actual control that the company exerts over contracted, leased or temporary workers.

Looking Forward

Labor Code Section 2810.3 and the NLRB's decision in the Browning-Ferris case should be a wakeup call for California employers to pay special attention to how they retain their workforce and the relationships they forge with respect to hiring temporary and contract laborers. The change in the Labor Code and the NLRB decision signal a shift in pedagogy that may lead to more risk for businesses when it comes to collective bargaining and the potential for employment based suits by workers that were otherwise never thought to be "employees."  Though State and Federal Courts do not generally look to the NLRB for interpretation of law, the Browning-Ferris decision and the change in the Labor Code could lead to a shift in the way courts look at employees and if that shift follows the NLRB's Browning-Ferris viewpoint, businesses are likely faced with a higher cost of doing business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions