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Paul Millus Quoted in Law360, "Big NLRB Joint Employer Case May Steal McDonald's Thunder"

Sep 5, 2014Employment LawLitigation & Dispute Resolution

Media Source: Law 360


The National Labor Relations Board's general counsel grabbed headlines with a decision to treat McDonald's Corp. as a joint employer with franchisees, but attorneys say another case, in which the board could change a 30-year-old standard for determining joint employer status, is the one to watch because it will tackle the issue before the McDonald's cases are heard.

In late July, the office of NLRB General Counsel Richard Griffin issued a directive saying it would consider McDonald's a joint employer with its franchisees in a number of unfair-labor-practices cases. That determination caught the attention of national news outlets, and at the time, attorneys said it could affect a wide swath of franchise-heavy industries and give unions an advantage in their efforts to organize workers.

The general counsel's announcement, however, came after the NLRB had already indicated in a separate case — involving waste services company Browning-Ferris Industries of California Inc. and staffing agency Leadpoint Business Services Inc. — that it was considering changes to a decades-old standard for determining joint employer status.

The NLRB has, since a pair of rulings in 1984, used a standard that treats two companies as joint employers if both exercise a significant degree of control over the same employees. With the Browning-Ferris case, experts say, the board may adjust the standard to require a “totality of the circumstances” evaluation that takes broader account of several factors to determine whether two companies qualify as joint employers.

Attorneys told Law360 that the general counsel's McDonald's announcement was noteworthy but that the Browning-Ferris case — which is much further along — is one that employers across a range of industries should be paying close attention to, since the board's decision there could have wide-reaching impacts.

“The real story, when the history of the [2014] National Labor Relations Board is going to be written, is how the NLRB re-defined who an employer is,” said Michael Lotito, head of Littler Mendelson PC's Workplace Policy Institute.

The Browning-Ferris case, itself, arose from a petition for a representation election in which the union involved — Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters — sought treatment of both Browning-Ferris and Leadpoint as employers for collective bargaining purposes. In August 2013, a regional director ruled that Browning-Ferris was not a joint employer, directing an election among Leadpoint employees who worked as sorters at a Browning-Ferris-owned recycling facility.

Among the reasons to watch the Browning-Ferris case now is that it has already gone through the vast majority of the NLRB's administrative process, putting it at a much more advanced stage than the McDonald's cases. The NLRB announced in May that it would accept input on the Browning-Ferris case, and the deadlines for submitting briefs, both for amicus participants and the parties directly involved in the case, have passed, leaving only a final board ruling to come.

“The McDonald's case is in its infancy compared to Browning-Ferris,” said Paul Millus, of counsel in Meyer Suozzi English & Klein PC's employment group.

Also discussing the timing of when the NLRB might rule in the Browning-Ferris case, Lotito said he would expect the board to act before the term of Democratic board member Nancy Schiffer runs out in mid-December.

But beyond the timing issues, there are other, substantive factors that increase the potential impact of the Browning-Ferris case. For one, if the NLRB does create a new standard for determining joint employer status, it would apply across the board, to a variety of business models used in different industries and to all of the types of cases — those dealing with both representation and collective bargaining issues and allegations of unfair labor practices — that the NLRB considers, attorneys say.

As Millus explained, if the general counsel's determination with respect to McDonald's was a “tremor,” the impending decision in Browning-Ferris “could be an absolute earthquake.”

Seth Borden, a partner in McKenna Long & Aldridge LLP's employer services group, expressed a similar thought. While reluctant to describe the general counsel's McDonald's determination as less important than what the board may do in the Browning-Ferris case, Borden said one thing is certain: The Browning-Ferris decision is “going to have a broad-ranging effect.”

He explained that, in his view, the NLRB's request for input in the Browning-Ferris case was a clear indication the board is looking to overhaul the existing joint employer standard.

“I do not see the general counsel staking out such a public position on the McDonald's case, without having some sense of the direction the board is going to take on the broader issue,” Borden said.

And if the board does follow through and alter the standard, that, in turn, has the potential to affect businesses that run on a franchise model, utilize subcontractors or vendors, or get some of their workers through a staffing agency, among others.

“It will apply to any number of different business models,” Borden said.

In concrete terms, expanding the joint employer standard would subject more businesses to unfair-labor-practices claims, attorneys said. A broader standard would also open up a new avenue for union organizing, since gaining support among workers who are nominally employed by a subcontractor, franchisee or staffing agency could translate into representation rights at a large, national company.

Taking McDonald's as an example, a broadened standard — one that treats the fast-food giant as a joint employer with its franchisees — could allow a union to win support among employees at a single restaurant, then, in turn, force McDonald's, and not just the franchisee, to come to the bargaining table.

“This is really the touchstone moment for the union movement,” Millus said.