Democrats Seek Clarity on NLRB’s “Joint-Employer” Standard

MAY 17, 2017

Thirteen House Democrats have sent a letter to the National Labor Relations Board’s (NLRB) associate general counsel, seeking clarification on the extent to which an employer can rely on the 2015 "Freshii memo" that concluded that the corporate Freshii was not a joint-employer with Nutritionality (a franchisee of a Freshii store) under the NLRB’s "joint-employer" standard.

In 2015, the NLRB overturned 30 years of precedent and certainty for what constitutes a “joint-employment” relationship. Under the old joint employer standard, a business could be considered a joint employer — or responsible for another company’s employees — if “two separate entities share or codetermine those matters governing the essential terms and conditions of employment” and the entity had a “meaningful effect on matters relating to the employment relationship, such as hiring, firing, discipline, supervision and direction.”

In the Browning-Ferris decision, the NLRB created a lower threshold to establish “joint-employer” status. In rendering the decision, the NLRB stated that the new inquiry centers around whether a putative joint employer has authority — even indirect authority — to control essential terms and conditions of employment.

The ramifications of this decision may not be understated as the clear dividing line between employee and contractor has been blurred.

The 10-page Freshii memo had more than three pages explaining why Freshii and Nutritionality were not joint employers under the NLRB's new joint-employer standard. NLRB devoted only three paragraphs to analyzing why the two companies did not qualify as joint employers.

The Congressional letter to NLRB highlights the ongoing confusion that NLRB created with its Browning-Ferris decision and the need for a more reasonable standard for when a company is considered a joint-employer. The Members of Congress asked NLRB to provide clarity to by expanding on two issues regarding its Freshii Memo:

  1. May the memo be used as a blueprint for all franchise systems notwithstanding the 2015 precedent; and,
  2. How much flexibility will franchisers have to implement, articulate and enforce brand standards before they are deemed to cross the line into the areas of "indirect," "unexercised" or "potential" control for joint employer purposes.

Labor unions and worker advocates have embraced the new NLRB joint-employer standard, arguing that it gives important leverage to employees in negotiating the terms of their employment.​​