Joint Employment Standards

By Roger Crawford and Tristan Kirk.

The last few years have seen a number of attempts to revise well-established joint employer standards under both the National Labor Relations Act and the Fair Labor Standards Act. While many of the recent developments impact primarily the private sector, there are potential impacts that public employers should be aware of.

The movement began around the time of the National Labor Relations Board’s 2015 decision in Browning-Ferris Industries of California, Inc. In that decision, the NLRB rejected long-standing precedent that a business could only be a joint employer if it exerted “direct and immediate control” over employees’ terms and conditions of employment. Instead, the NLRB held that the business could be a joint employer if it had reserved authority to exert control over terms and conditions of employment, even if it never actually exercised that control. Further, that control no longer needed to be direct. It could be indirect or even implied.

While this new standard is technically confined to the NLRA — and thus ostensibly inapplicable to California public employers — there is a chance that the Public Employment Relations Board will consider and apply the NLRB’s standard when making its joint employer determinations. Indeed, PERB had cited to the old NLRB standard as influential when making prior joint employer determinations. Given the weight that PERB gives at times to NLRB decisions, it is not hard to imagine PERB using this new NLRB test as the basis for future joint employer determinations.

It should be noted that the Browning-Ferris decision is on appeal and is awaiting review by a panel before the D.C. Circuit, and thus it remains to be seen whether it will remain good law. The D.C. Circuit’s ruling will be critical in the fight to rein in the much-expanded NLRB joint employer test.

Another significant development occurred earlier this year when the U.S. Fourth Circuit Court of Appeals held that joint employment exists for purposes of the FLSA if “two or more persons or entities are ‘not completely disassociated’ with respect to a worker.” This pivot is particularly concerning because it shifts the joint employer inquiry’s focus from the relationship between the relevant entity and worker to the relationship between the two putative employers.

While it is true that the U.S. Ninth Circuit Court of Appeals has its own joint employer test under the FLSA — which stresses the importance of the amount of control an entity has over an employee but also takes into account the “total employment situation and the economic realities of the work relationship” — the Fourth Circuit’s decision has been appealed to the U.S. Supreme Court. If the Supreme Court chooses to hear the appeal, its decision may become the law of the land for all FLSA joint employer determinations. But even if the Court denies the petition for certiorari in this case, there’s still a chance that a private plaintiff will argue that it is persuasive and that the Ninth Circuit’s standard should be changed accordingly.

In short, and for the time being, the shifting joint employer landscape has not directly affected California public employers, but it is important to nevertheless remain cognizant of these developments, as there is potential that this trend of expanding the scope of joint employment will make its way to the public sector in California in the near future.

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Roger Crawford is a partner at Best Best & Krieger LLP, focusing on labor and employment law. He can be reached at roger.crawford@bbklaw.com.