Employment Law Observer

On June 13, 2024, the U.S. Supreme Court, in Starbucks Corp. v. McKinney (National Labor Relations Board), No. 23-367, rejected the arguments of the National Labor Relations Board (the “Board”) to relax the standard that a district court must employ in deciding whether to implement injunctive relief under Section 10(j) of the National Labor Relations Act (the “Act”). 

Following in the footsteps of the U.S. Department of Labor, the National Labor Relations Board (NLRB) announced its Final Rule regarding joint employment. While the NLRB rarely engages in rulemaking, it deemed it necessary in this instance to provide clarity and predictability regarding joint employment. Effective April 27, 2020, the Final Rule rescinds the current test which went into effect in 2015 and reverts back to the prior analysis. This impacts all employers, particularly in the context of collective bargaining, staffing companies, and franchisers.

The U.S. Department of Labor recently issued a Final Rule to update longstanding "joint employer" regulations which will take effect March 16, 2020, under the Fair Labor Standards Act (FLSA). Under the FLSA, an employee may have one or more employers that are jointly and severally liable for violations of the FLSA. The new regulations provide clarity and, consequently, increase employers' comfort levels as to agreements with independent service providers.

We have written previously regarding the saga of the National Labor Relations Board and joint employer status here, here, and here. In short, the question of when a business is responsible for another business’s employees has been in flux for a few years, affecting franchisee/franchisor relationships, businesses that utilize temporary employees, parent and subsidiary companies, and similar arrangements.

Over the last month, we have seen a number of significant restorations of status quo antes. These have come in the form of reverting to earlier precedent, regulations, or guidance. Without further ado, we present some of the more notable developments:

On December 14, 2017, the National Labor Relations Board (Board) overruled the standard for joint employment set forth in Browning-Ferris and returned to longstanding, prior principles governing the determination of joint-employer status. With a new majority, the Board held “joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control); the control must be “direct and immediate” (rather than indirect), and joint-employer status will not result from control that is “limited and routine.”  The Board made clear it intended to align the determination of joint-employer status with the holdings of numerous federal and state courts. Although finding Browning-Ferris well-intentioned, the Board identified five fundamental flaws that warranted reversal. The Board’s decision is being widely viewed as a victory for employers as it removes ambiguities related to control and clarifies the standard for determining joint employment.

With the election of Donald Trump and transition to a Republican administration looming, employers are scrambling to predict what impact Trump will have on labor and employment policy and enforcement initiatives. What employers can expect in the first 12 months of a Trump Administration is unclear, but there likely will be change in the following areas:

On Monday, the National Labor Relations Board made it easier for unions to organize temporary workers in a 3-1 decision in the case Miller & Anderson. In doing so, the Board reversed its ruling in Oakwood Care Center, 343 NLRB 659 (2004) and returned to the standard established in M.B. Sturgis, Inc., 331 NLRB 1298 (2000). 

Over the course of the last year, we have kept you abreast of National Labor Relations Board (NLRB) case law and Department of Labor (DOL) interpretive/enforcement guidance, how these agencies are changing their view of the responsibility of parent corporations for the employment relationship between employees of temporary agencies and franchises, and how these changes have the potential to drastically alter the benefits and risks of utilizing these relationships.

In a dramatic departure from over 30 years of precedent, the National Labor Relations Board has modified the standard by which it determines whether two entities are "joint employers" under the National Labor Relations Act (NLRA). The 3-2 ruling in Browning-Ferris Industries of California, published on August 27, 2015, has serious implications for companies that utilize staffing agencies and temporary employees, and for the staffing agencies themselves. The ruling greatly increases the ability of workers to bargain with both their employer and the company that hires their employer and to hold both companies responsible for various wrongs. 

Any time an employer is involved in a franchise relationship, there are bound to be unique issues when legal disputes arise, particularly in the employment context. It is no longer surprising to see the names of any and all related entities captioned as the defendant in an employment lawsuit, and this includes franchisors who may have absolutely no relationship with or control over the employer's employees.

Often times, employees name parent companies and other affiliated entities when suing their employers, seeking to hold responsible anyone and everyone who could possibly be construed to be the "employer" for the purposes of employment law related claims. That plan backfired on a New York employee, after she attempted to recover from a holding company who really had no employment relationship with the employee.

Joyce Whitaker began working for Milwaukee County as a corrections officer in 2001. In 2005, she sustained a work-related back injury and subsequently was diagnosed with several related medical conditions. As a result, her physician imposed permanent work restrictions and limitations in a number of basic tasks, including sitting, standing and walking. After receiving the restrictions, the County transferred Whitaker to a new position to accommodate her disability.