Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Proposed Rules 46681 

(c) Applicability 

This AD applies to all Zodiac Seats France, 

536-Series Cabin Attendant Seats, part 

number (P/N) 53600, all dash numbers, all 

serial numbers. These appliances are 

installed on, but not limited to, Avions de 

transport regional (ATR) 42 and ATR 72 

airplanes of U.S. registry. 

(d) Subject 

Joint Aircraft System Component (JASC) 

Code 2500, Cabin Equipment/Furnishings. 

(e) Unsafe Condition 

This AD was prompted by corrosion found 

on the seat structure or on clamps of the 

Zodiac Seats France 536-Series Cabin 

Attendant Seats. We are issuing this AD to 

prevent failure of these seats. The unsafe 

condition, if not addressed, could result in 

failure of the seat occupied by the cabin 

attendant, and possible injury to the seat 

occupant. 

(f) Compliance 

Comply with this AD within the 

compliance times specified, unless already 

done. 

(g) Required Actions 

(1) Within 14 months after the first 

installation of the seat on an aircraft, or 

within three months after the effective date 

of this AD, whichever occurs later, remove 

the seat from the aircraft and perform a 

detailed visual inspection in accordance with 

the Accomplishment Instructions, Paragraph 

2.B., of Zodiac Seats France Service Bulletin 

(SB) No. 536–25–002, Revision 3, dated 

September 30, 2016. If the date of the first 

installation of a seat on an airplane is 

unknown, use the date of manufacture of the 

seat (which can be found on the ID placard 

of the seat) to determine when the inspection 

must be accomplished. 

(2) Within three months after the 

inspection required by paragraph (g)(1) of 

this AD, and, thereafter, at intervals not to 

exceed three months, perform a detailed 

visual inspection in accordance with the 

Accomplishment Instructions, Paragraphs 

2.A. and 2.B., of Zodiac Seats France SB No. 

536–25–002, Revision 3, dated September 30, 

2016. 

(3) If corrosion or other damage is found, 

before further flight or before reinstallation of 

the seat on an aircraft, as applicable, repair 

the seat in accordance with the 

Accomplishment Instructions, Paragraphs 

2.B. and 2.C., of Zodiac Seats France SB No. 

536–25–002, Revision 3, dated September 30, 

2016. 

(4) Temporarily stowing and securing a 

damaged attendant seat in a retracted 

position to prevent occupancy, in accordance 

with the provisions and limitations 

applicable Master Minimum Equipment List 

item, is an acceptable alternative method to 

defer compliance with the requirements of 

paragraph (g)(3) of this AD. 

(h) Installation Prohibition 

After the effective date of this AD, do not 

install an affected Zodiac Seats France 536- 

Series Cabin Attendant Seat on any aircraft, 

unless having accumulated more than 14 

months since first installation on any aircraft, 

provided that before installation, it has 

passed an inspection in accordance with the 

Accomplishment Instructions, Paragraph 

2.B., of Zodiac Seats France SB No. 536–25– 

002, Revision 3, dated September 30, 2016. 

(i) Credit for Previous Actions 

You may take credit for actions required by 

paragraph (g) of this AD if you performed 

these actions before the effective date of this 

AD using Zodiac Seats France SB No. 536– 

25–002, Revision 2, dated August 29, 2016. 

(j) Alternative Methods of Compliance 

(AMOCs) 

(1) The Manager, Boston ACO Branch, 

FAA, has the authority to approve AMOCs 

for this AD, if requested using the procedures 

found in 14 CFR 39.19. In accordance with 

14 CFR 39.19, send your request to your 

principal inspector or local Flight Standards 

District Office, as appropriate. If sending 

information directly to the manager of the 

ACO Branch, send it to the attention of the 

person identified in paragraph (k)(1) of this 

AD. 

(2) Before using any approved AMOC, 

notify your appropriate principal inspector, 

or lacking a principal inspector, the manager 

of the local flight standards district office/ 

certificate holding district office. 

(k) Related Information 

(1) For more information about this AD, 

contact Dorie Resnik, Aerospace Engineer, 

Boston ACO Branch, FAA, 1200 District 

Avenue, Burlington, MA, 01803; phone: 781– 

238–7693; fax: 781–238–7199; email: 

dorie.resnik@faa.gov. 

(2) Refer to European Aviation Safety 

Agency AD 2016–0167, dated August 17, 

2016, for more information. You may 

examine the EASA AD in the AD docket on 

the internet at http://www.regulations.gov by 

searching for and locating it in Docket No. 

FAA–2017–0839. 

(3) For service information identified in 

this AD, contact Zodiac Service Europe, 61, 

rue Pierre Curie, 78 373 Plaisir, France; 

phone: +33 (0)1 61 34 19 58; email: zs.aog@

zodiacaerospace.com; website: https://

www.zodiacaerospace.com/en/zodiacaerospace-services/contacts. You may view 

this referenced service information at the 

FAA, Engine and Propeller Standards 

Branch, 1200 District Avenue, Burlington, 

MA, 01803. For information on the 

availability of this material at the FAA, call 

781–238–7759. 

Issued in Burlington, Massachusetts, on 

September 5, 2018. 

Robert J. Ganley, 

Manager, Engine and Propeller Standards 

Branch, Aircraft Certification Service. 

[FR Doc. 2018–19797 Filed 9–13–18; 8:45 am] 

BILLING CODE 4910–13–P 

NATIONAL LABOR RELATIONS 

BOARD 

29 CFR Chapter I 

RIN 3142–AA13 

The Standard for Determining JointEmployer Status 

AGENCY: National Labor Relations 

Board. 

ACTION: Notice of proposed rulemaking; 

request for comments. 

SUMMARY: In order to more effectively 

enforce the National Labor Relations Act 

(the Act or the NLRA) and to further the 

purposes of the Act, the National Labor 

Relations Board (the Board) proposes a 

regulation establishing the standard for 

determining whether two employers, as 

defined in Section 2(2) of the Act, are 

a joint employer of a group of 

employees under the NLRA. The Board 

believes that this rulemaking will foster 

predictability and consistency regarding 

determinations of joint-employer status 

in a variety of business relationships, 

thereby promoting labor-management 

stability, one of the principal purposes 

of the Act. Under the proposed 

regulation, an employer may be 

considered a joint employer of a 

separate employer’s employees only if 

the two employers share or codetermine 

the employees’ essential terms and 

conditions of employment, such as 

hiring, firing, discipline, supervision, 

and direction. More specifically, to be 

deemed a joint employer under the 

proposed regulation, an employer must 

possess and actually exercise substantial 

direct and immediate control over the 

essential terms and conditions of 

employment of another employer’s 

employees in a manner that is not 

limited and routine. 

DATES: Comments regarding this 

proposed rule must be received by the 

Board on or before November 13, 2018. 

Comments replying to comments 

submitted during the initial comment 

period must be received by the Board on 

or before November 20, 2018. Reply 

comments should be limited to replying 

to comments previously filed by other 

parties. No late comments will be 

accepted. 

ADDRESSES: 

Internet—Federal eRulemaking Portal. 

Electronic comments may be submitted 

through http://www.regulations.gov. 

Delivery—Comments should be sent 

by mail or hand delivery to: Roxanne 

Rothschild, Associate Executive 

Secretary, National Labor Relations 

Board, 1015 Half Street SE, Washington, 

DC 20570–0001. Because of security 


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46682 Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Proposed Rules 

precautions, the Board continues to 

experience delays in U.S. mail delivery. 

You should take this into consideration 

when preparing to meet the deadline for 

submitting comments. The Board 

encourages electronic filing. It is not 

necessary to send comments if they 

have been filed electronically with 

regulations.gov. If you send comments, 

the Board recommends that you confirm 

receipt of your delivered comments by 

contacting (202) 273–2917 (this is not a 

toll-free number). Individuals with 

hearing impairments may call 1–866– 

315–6572 (TTY/TDD). 

Only comments submitted through 

http://www.regulations.gov, hand 

delivered, or mailed will be accepted; ex 

parte communications received by the 

Board will be made part of the 

rulemaking record and will be treated as 

comments only insofar as appropriate. 

Comments will be available for public 

inspection at http://

www.regulations.gov and during normal 

business hours (8:30 a.m. to 5 p.m. EST) 

at the above address. 

The Board will post, as soon as 

practicable, all comments received on 

http://www.regulations.gov without 

making any changes to the comments, 

including any personal information 

provided. The website http://

www.regulations.gov is the Federal 

eRulemaking portal, and all comments 

posted there are available and accessible 

to the public. The Board requests that 

comments include full citations or 

internet links to any authority relied 

upon. The Board cautions commenters 

not to include personal information 

such as Social Security numbers, 

personal addresses, telephone numbers, 

and email addresses in their comments, 

as such submitted information will 

become viewable by the public via the 

http://www.regulations.gov website. It is 

the commenter’s responsibility to 

safeguard his or her information. 

Comments submitted through http://

www.regulations.gov will not include 

the commenter’s email address unless 

the commenter chooses to include that 

information as part of his or her 

comment. 

FOR FURTHER INFORMATION CONTACT: 

Roxanne Rothschild, Associate 

Executive Secretary, National Labor 

Relations Board, 1015 Half Street SE, 

Washington, DC 20570–0001, (202) 273– 

2917 (this is not a toll-free number), 1– 

866–315–6572 (TTY/TDD). 

SUPPLEMENTARY INFORMATION: Whether 

one business is the joint employer of 

another business’s employees is one of 

the most important issues in labor law 

today. There are myriad relationships 

between employers and their business 

partners, and the degree to which 

particular business relationships impact 

employees’ essential terms and 

conditions of employment varies 

widely. 

A determination by the Board 

regarding whether two separate 

businesses constitute a ‘‘joint employer’’ 

as to a group of employees has 

significant consequences for the 

businesses, unions, and employees 

alike. When the Board finds a jointemployer relationship, it may compel 

the joint employer to bargain in good 

faith with a Board-certified or 

voluntarily recognized bargaining 

representative of the jointly-employed 

workers. Additionally, each joint 

employer may be found jointly and 

severally liable for unfair labor practices 

committed by the other. And a finding 

of joint-employer status may determine 

whether picketing directed at a 

particular business is primary and 

lawful, or secondary and unlawful. 

The last three years have seen much 

volatility in the Board’s law governing 

joint-employer relationships. As 

detailed below, in August 2015, a 

divided Board overruled longstanding 

precedent and substantially relaxed the 

evidentiary requirements for finding a 

joint-employer relationship. BrowningFerris Industries of California, Inc., d/b/ 

a BFI Newby Island Recyclery, 362 

NLRB No. 186 (2015) (Browning-Ferris), 

petition for review docketed BrowningFerris Indus. of Cal. v. NLRB, No. 16– 

1028 (D.C. Cir. filed Jan. 20, 2016). 

Then, in December 2017, a different 

Board majority restored the prior, more 

stringent standard. In February 2018, 

the Board vacated its December 2017 

decision, effectively changing the law 

back again to the relaxed standard of 

Browning-Ferris. A petition for review 

challenging Browning-Ferris’s adoption 

of the relaxed standard as beyond the 

Board’s statutory authority is currently 

pending in the United States Court of 

Appeals for the District of Columbia 

Circuit. In light of the continuing 

uncertainty in the labor-management 

community created by these 

adjudicatory variations in defining the 

appropriate joint-employer standard 

under the Act, and for the reasons 

explained below, the Board proposes to 

address the issue through the 

rulemaking procedure. 

I. Background 

Under Section 2(2) of the Act, ‘‘the 

term ‘employer’ includes any person 

acting as an agent of an employer, 

directly or indirectly, but shall not 

include the United States or any wholly 

owned Government corporation, or any 

Federal Reserve Bank, or any State or 

political subdivision thereof, or any 

person subject to the Railway Labor Act 

[45 U.S.C. 151 et seq.], as amended from 

time to time, or any labor organization 

(other than when acting as an 

employer), or anyone acting in the 

capacity of officer or agent of such labor 

organization.’’ Under Section 2(3) of the 

Act, ‘‘the term ‘employee’ shall include 

any employee, and shall not be limited 

to the employees of a particular 

employer, unless this subchapter [of the 

Act] explicitly states otherwise . . . .’’ 

Section 7 of the Act grants employees 

‘‘the right to self-organization, to form, 

join, or assist labor organizations, to 

bargain collectively through 

representatives of their own choosing, 

and to engage in other concerted 

activities for the purpose of collective 

bargaining or other mutual aid or 

protection . . . .’’ Section 8(a)(1) of the 

Act makes it an unfair labor practice for 

an employer ‘‘to interfere with, restrain, 

or coerce employees in the exercise of 

the rights guaranteed in [Section 7],’’ 

and Section 8(a)(5) of the Act makes it 

an unfair labor practice for an employer 

‘‘to refuse to bargain collectively with 

the representatives of his employees 

. . . .’’ (emphasis added). 

The Act does not contain the term 

‘‘joint employer,’’ much less define it, 

but the Board and reviewing courts have 

over the years addressed situations 

where the working conditions of a group 

of employees are affected by two 

separate companies engaged in a 

business relationship. Boire v. 

Greyhound Corp., 376 U.S. 473 (1964) 

(holding that Board’s determination that 

bus company possessed ‘‘sufficient 

control over the work’’ of its cleaning 

contractor’s employees to be considered 

a joint employer was not reviewable in 

federal district court); Indianapolis 

Newspapers, Inc., 83 NLRB 407, 408– 

409 (1949) (finding that two newspaper 

businesses, Star and INI, were not joint 

employers, despite their integration, 

because ‘‘there [wa]s no indication that 

Star, by virtue of such integration, t[ook] 

an active part in the formulation or 

application of the labor policy, or 

exercise[d] any immediate control over 

the operation, of INI’’). 

When distinguishing between an 

‘‘employee’’ under Section 2(3) of the 

Act and an ‘‘independent contractor’’ 

excluded from the Act’s protection, the 

Supreme Court has explained that the 

Board is bound by common-law 

principles, focusing on the control 

exercised by one employer over a 

person performing work for it. NLRB v. 

United Insurance Co. of America, 390 

U.S. 254, 256 (1968); see also 

Nationwide Mutual Insurance Co. v. 

Darden, 503 U.S. 318, 322–323 (1992) 


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1As the Third Circuit explained, a ‘‘single 

employer’’ relationship exists where two nominally 

separate employers are actually part of a single 

integrated enterprise so that, for all purposes, there 

is in fact only a ‘‘single employer.’’ The question 

in the ‘‘single employer’’ situation, then, is whether 

two nominally independent enterprises constitute, 

in reality, only one integrated enterprise. In 

answering that question, the Board examines four 

factors: (1) Functional integration of the operations; 

(2) centralized control of labor relations; (3) 

common management; and (4) common ownership. 

In contrast, the ‘‘joint employer’’ concept assumes 

that the two companies are indeed independent 

employers, and the four-factor standard is 

inapposite. Rather, as stated above, the Board has 

analyzed whether the two separate employers share 

or codetermine essential terms and conditions of 

employment. 

2 In Floyd Epperson, the Board found that United 

had indirect control over the drivers’ wages because 

wage increases to Epperson’s drivers came from 

raises given by United to Epperson, a sole 

proprietor. The Board found that United had 

indirect influence over discipline because Epperson 

replaced a certain driver on a route after United 

complained that the driver had been constantly late. 

202 NLRB at 23. 

3See also Sun-Maid Growers of California, 239 

NLRB 346 (1978) (finding that food-processing 

company was joint employer of maintenance 

electricians supplied by a subcontractor where 

company actually directed electricians by making 

specific assignments to individual electricians and 

determined which of those assignments took 

precedence when all could not be timely 

completed; the Board also relied on indirect impact 

on other terms), enfd. 618 F.2d 56 (9th Cir. 1980); 

Hamburg Industries, Inc., 193 NLRB 67, 67 (1971) 

(finding remanufacturer of railroad cars was a joint 

employer of labor force supplied by subcontractor 

where remanufacturer used subcontractor’s 

supervisors as conduit to convey work instructions 

while ‘‘constantly check[ing] the performance of the 

workers and the quality of the work’’ and where 

remanufacturer also indirectly affected employees’ 

other terms) (emphasis added). The Board’s 

decision in Clayton B. Metcalf, 223 NLRB 642 

(1976), appears to be the closest the Board has come 

to finding a joint-employment relationship in the 

absence of some exercise of direct and immediate 

control over essential terms. There, the Board found 

that a mine operator did not exercise direct 

supervisory authority over the employees of a 

subcontractor engaged to remove ‘‘overburden’’ 

atop coal seams. However, the Board found that the 

subcontractor’s entire operation in removing the 

overburden, as well as other collateral duties 

performed by it, depended entirely on the mine 

operator’s site plan, and, ‘‘[a]s a result, [the mine 

operator] exercised considerable control over the 

manner and means by which [the subcontractor] 

performed its operations.’’ Id. at 644 (emphasis 

added). 

(‘‘[W]hen Congress has used the term 

‘employee’ without defining it, we have 

concluded that Congress intended to 

describe the conventional masterservant relationship as understood by 

common law agency doctrine.’’) 

(citations omitted). Similarly, it is clear 

that the Board’s joint-employer 

standard, which necessarily implicates 

the same focus on employer control, 

must be consistent with the common 

law agency doctrine. 

The Development of the JointEmployment Doctrine Under the NLRA 

Under the Act, there has been a 

longstanding consensus regarding the 

general formulation of the Board’s jointemployer standard: Two employers are 

a joint employer if they share or 

codetermine those matters governing the 

employees’ essential terms and 

conditions of employment. See CNN 

America, Inc., 361 NLRB 439, 441, 469 

(2014), enf. denied in part 865 F.3d 740 

(D.C. Cir. 2017); Southern California 

Gas Co., 302 NLRB 456, 461 (1991). The 

general formulation derives from 

language in Greyhound Corp., 153 NLRB 

1488, 1495 (1965), enfd. 368 F.2d 778 

(1966), and was endorsed in NLRB v. 

Browning-Ferris Industries, 691 F.2d 

1117, 1122–1123 (3d Cir. 1982), where 

the United States Court of Appeals for 

the Third Circuit carefully explained the 

differences between the Board’s jointemployer and single-employer 

doctrines, which had sometimes been 

confused.1

At certain points in its history, the 

Board has discussed the relevance of an 

employer’s direct control over the 

essential employment conditions of 

another company’s employees, as 

compared with its indirect control or 

influence, in determining whether jointemployer status has been established. 

For example, in Floyd Epperson, 202 

NLRB 23, 23 (1973), enfd. 491 F.2d 1390 

(6th Cir. 1974), the Board found that a 

dairy company (United) was the joint 

employer of truck drivers supplied to it 

by an independent trucking firm (Floyd 

Epperson) based on evidence of both 

United’s direct control and indirect 

control over the working conditions of 

Epperson’s drivers. The Board relied on 

‘‘all the circumstances’’ of the case, 

including the fact that United dictated 

the specific routes that Epperson’s 

drivers were required to take when 

transporting its goods, ‘‘generally 

supervise[d]’’ Epperson’s drivers, and 

had authority to modify their work 

schedules. Id. at 23. The Board also 

relied in part on United’s ‘‘indirect 

control’’ over the drivers’ wages and 

discipline.2 Id. Importantly, in Floyd 

Epperson and like cases, the Board was 

not called upon to decide, and did not 

assert, that a business’s indirect 

influence over another company’s 

workers’ essential working conditions, 

standing alone, could establish a jointemployer relationship.3

In fact, more recently, the Board, with 

court approval, has made clear that ‘‘the 

essential element’’ in a joint-employer 

analysis ‘‘is whether a putative joint 

employer’s control over employment 

matters is direct and immediate.’’ 

Airborne Express, 338 NLRB 597, 597 

fn. 1 (2002) (citing TLI, Inc., 271 NLRB 

798, 798–799 (1984), enfd. mem. sub 

nom. General Teamsters Local Union 

No. 326 v. NLRB, 772 F.2d 894 (3d Cir. 

1985)); see also NLRB v. CNN America, 

Inc., 865 F.3d 740, 748–751 (D.C. Cir. 

2017) (finding that Board erred by 

failing to adhere to the Board’s ‘‘direct 

and immediate control’’ standard); SEIU 

Local 32BJ v. NLRB, 647 F.3d 435, 442– 

443 (2d Cir. 2011) (‘‘ ‘An essential 

element’ of any joint employer 

determination is ‘sufficient evidence of 

immediate control over the 

employees.’ ’’) (quoting Clinton’s Ditch 

Co-op Co. v. NLRB, 778 F.2d 132, 138 

(2d Cir. 1985)); Summit Express, Inc., 

350 NLRB 592, 592 fn. 3 (2007) (finding 

that the General Counsel failed to prove 

direct and immediate control and 

therefore dismissing joint-employer 

allegation); Laerco Transportation, 269 

NLRB 324 (1984) (dismissing jointemployer allegation where user 

employer’s supervision of supplied 

employees was limited and routine). 

Accordingly, for at least 30 years 

(from no later than 1984 to 2015), 

evidence of indirect control was 

typically insufficient to prove that one 

company was the joint employer of 

another business’s workers. Even direct 

and immediate supervision of another’s 

employees was insufficient to establish 

joint-employer status where such 

supervision was ‘‘limited and routine.’’ 

Flagstaff Medical Center, Inc., 357 

NLRB 659, 667 (2011); AM Property 

Holding Corp., 350 NLRB 998, 1001 

(2007), enfd. in relevant part sub nom. 

SEIU, Local 32 BJ v. NLRB, 647 F.3d 435 

(2d Cir. 2011); G. Wes Ltd. Co., 309 

NLRB 225, 226 (1992). The Board 

generally found supervision to be 

limited and routine where a supervisor’s 

instructions consisted mostly of 

directing another business’s employees 

what work to perform, or where and 

when to perform the work, but not how 

to perform it. Flagstaff Medical Center, 

357 NLRB at 667. 

The Board’s treatment of a company’s 

contractually reserved authority over an 

independent company’s employees also 

evolved over the years. In the 1960s, the 

Board found that a contractual 

reservation of authority, standing alone, 

could establish a joint-employer 

relationship even where that reserved 

authority had never been exercised. For 

example, in Jewel Tea Co., 162 NLRB 

508, 510 (1966), the Board found that a 

department store (the licensor) was a 

joint employer of the employees of two 

independent companies licensed to 

operate specific departments of its store. 

The text of the license agreements 

between the store and the departments 

provided, inter alia, that ‘‘employees 

shall be subject to the general 


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supervision of the licensor,’’ that the 

licensee ‘‘shall at all times conform to 

a uniform store policy with reference to 

wages, hours and terms, and conditions 

of employment for all sales and stock 

personnel,’’ that the licensor shall 

approve employees hired by the 

licensee, and that the licensor ‘‘may 

request discharge and the licensee will 

immediately comply with such 

request.’’ The Board found it ‘‘clear 

beyond doubt’’ that the license 

agreements gave the store the ‘‘power to 

control effectively the hire, discharge, 

wages, hours, terms, and other 

conditions of employment’’ of the other 

two companies’ employees. According 

to the Board, ‘‘[t]hat the licensor has not 

exercised such power is not material, for 

an operative legal predicate for 

establishing a joint-employer 

relationship is a reserved right in the 

licensor to exercise such control, and 

we find such right of control adequately 

established by the facts set out above.’’ 

Id.; see also Thriftown, Inc., 161 NLRB 

603, 607 (1966) (‘‘Since the power to 

control is present by virtue of the 

operating agreement, whether or not 

exercised, we find it unnecessary to 

consider the actual practice of the 

parties regarding these matters as 

evidenced by the record.’’). 

However, even during the same 

period, not all contractual reservations 

of authority were found sufficient to 

establish a joint-employer relationship. 

For example, in Hy-Chem Constructors, 

Inc., 169 NLRB 274 (1968), the Board 

found that a petrochemical 

manufacturer was not a joint employer 

of its construction subcontractor’s 

employees even though their cost-plus 

agreement reserved to the manufacturer 

a right to approve wage increases and 

overtime hours and the right to require 

the subcontractor to remove any 

employee whom the manufacturer 

deemed undesirable. The Board found 

that the first two reservations of 

authority ‘‘are consistent with the 

[manufacturer’s] right to police 

reimbursable expenses under its costplus contract and do not warrant the 

conclusion that [the manufacturer] has 

thereby forged an employment 

relationship, joint or otherwise, with the 

[subcontractor’s] employees.’’ Id. at 276. 

Additionally, the Board found the 

manufacturer’s ‘‘yet unexercised 

prerogative to remove an undesirable 

. . . employee’’ did not establish a jointemployment relationship. Id. 

Over time, the Board shifted position, 

without expressly overruling precedent, 

and held that joint-employer status 

could not be established by the mere 

existence of a clause in a business 

contract reserving to one company 

authority over its business partner’s 

employees absent evidence that such 

authority had ever been exercised. For 

example, in AM Property Holding Corp., 

the Board found that a ‘‘contractual 

provision giving [a property owner] the 

right to approve [its cleaning 

contractor’s] hires, standing alone, is 

insufficient to show the existence of a 

joint employer relationship.’’ 350 NLRB 

at 1000. The Board explained that ‘‘[i]n 

assessing whether a joint employer 

relationship exists, the Board does not 

rely merely on the existence of such 

contractual provisions, but rather looks 

to the actual practice of the parties.’’ Id. 

(citing TLI, 271 NLRB at 798–799). 

Because the record in AM Property 

failed to show that the property owner 

had ever actually participated in the 

cleaning contractor’s hiring decisions, 

the Board rejected the General Counsel’s 

contention that the two employers 

constituted a joint employer. See also 

Flagstaff Medical Center, 357 NLRB at 

667 (finding that business contract’s 

reservation of hospital’s right to require 

its subcontractor to ‘‘hire, discharge, or 

discipline’’ any of the subcontractor’s 

employees did not establish a jointemployer relationship absent evidence 

that the hospital had ever actually 

exercised such authority); TLI, 271 

NLRB at 798–799 (finding that paper 

company’s actual practice of only 

limited and routine supervision of 

leased drivers did not establish a jointemployer relationship despite broad 

contractual reservation of authority that 

paper company ‘‘will solely and 

exclusively be responsible for 

maintaining operational control, 

direction and supervision’’ over the 

leased drivers). 

The law governing joint-employer 

relationships changed significantly in 

August 2015. At that time, a divided 

Board overruled the then-extant 

precedent described above and 

substantially relaxed the requirements 

for proving a joint-employer 

relationship. Specifically, a Board 

majority explained that it would no 

longer require proof that a putative joint 

employer has exercised any ‘‘direct and 

immediate’’ control over the essential 

working conditions of another 

company’s workers. Browning-Ferris, 

362 NLRB No. 186, slip op. at 2, 13–16. 

The majority in Browning-Ferris 

explained that, under its new standard, 

a company could be deemed a joint 

employer even if its ‘‘control’’ over the 

essential working conditions of another 

business’s employees was indirect, 

limited and routine, or contractually 

reserved but never exercised. Id., slip 

op. at 15–16. 

The Browning-Ferris majority agreed 

with the core of the Board’s longrecognized joint-employer standard: 

whether two separate employers 

‘‘share’’ or ‘‘codetermine’’ those matters 

governing the essential terms and 

conditions of employment. Elaborating 

on the core ‘‘share’’ or ‘‘codetermine’’ 

standard, the Browning-Ferris majority 

noted that, in some cases, two 

companies may engage in genuinely 

shared decision-making by conferring or 

collaborating directly to set an essential 

term or condition of employment. 

Alternatively, each of the two 

companies ‘‘may exercise 

comprehensive authority over different 

terms and conditions of employment.’’ 

Id., slip op. at 15 fn. 80. 

While agreeing with the core 

standard, the Browning-Ferris majority 

believed that the Board’s joint-employer 

precedents had become ‘‘increasingly 

out of step with changing economic 

circumstances, particularly the recent 

dramatic growth in contingent 

employment relationships.’’ Id., slip op. 

at 1. The Browning-Ferris majority’s 

expressed aim was ‘‘to put the Board’s 

joint-employer standard on a clearer and 

stronger analytical foundation, and, 

within the limits set out by the Act, to 

best serve the Federal policy of 

‘encouraging the practice and procedure 

of collective-bargaining.’ ’’ Id., slip op. at 

2 (quoting 29 U.S.C. 151). 

According to the Browning-Ferris 

majority, during the period before 

Laerco and TLI were decided in 1984, 

the Board had ‘‘typically treated the 

right to control the work of employees 

and their terms of employment as 

probative of joint-employer status.’’ Id., 

slip op. at 9 (emphasis in original). Also 

during that time, ‘‘the Board gave 

weight to a putative joint employer’s 

‘indirect’ exercise of control over 

workers’ terms and conditions of 

employment.’’ Id. (citing Floyd 

Epperson, 202 NLRB at 23). 

The Browning-Ferris majority viewed 

Board precedent, starting with Laerco 

and TLI, that expressly required proof of 

some exercise of direct and immediate 

control as having unjustifiably and 

without explanation departed from the 

Board’s pre-1984 precedent. 

Specifically, the Browning-Ferris 

majority asserted that, in cases such as 

Laerco, TLI, AM Property, and Airborne 

Express, the Board had ‘‘implicitly 

repudiated its earlier reliance on 

reserved control and indirect control as 

indicia of joint-employer status.’’ Id., 

slip op. at 10. Further, the BrowningFerris majority viewed those decisions 

as ‘‘refus[ing] to assign any significance 

to contractual language expressly giving 

a putative employer the power to dictate 


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workers’ terms and conditions of 

employment.’’ Id. (emphasis added). 

In short, the Browning-Ferris majority 

viewed Board precedent between 1984 

and 2015 as having unreasonably 

‘‘narrowed’’ the Board’s joint-employer 

standard precisely when temporary and 

contingent employment relationships 

were on the rise. Id., slip op. at 11. In 

its view, under changing patterns of 

industrial life, a proper joint-employer 

standard should not be any ‘‘narrower 

than statutorily required.’’ Id. According 

to the Browning-Ferris majority, the 

requirement of exercise of direct and 

immediate control that is not limited 

and routine ‘‘is not, in fact, compelled 

by the common law—and, indeed, 

seems inconsistent with common-law 

principles.’’ Id., slip op. at 13. The 

Browning-Ferris majority viewed the 

common-law concept of the ‘‘right to 

control’’ the manner and means of a 

worker’s job performance—used to 

distinguish a servant (i.e., employee) 

from an independent contractor—as 

precluding, or at least counseling 

against, any requirement of exercise of 

direct and immediate control in the 

joint-employment context. Id. 

Browning-Ferris reflects a belief that it 

is wise, and consistent with the 

common law, to include in the 

collective-bargaining process an 

employer’s independent business 

partner that has an indirect or potential 

impact on the employees’ essential 

terms and conditions of employment, 

even where the business partner has not 

itself actually established those essential 

employment terms or collaborated with 

the undisputed employer in setting 

them. The Browning-Ferris majority 

believed that requiring such a business 

partner to take a seat at the negotiating 

table and to bargain over the terms that 

it indirectly impacts (or could, in the 

future, impact under a contractual 

reservation) best implements the right of 

employees under Section 7 of the Act to 

bargain collectively through 

representatives of their own choosing. 

The Browning-Ferris majority conceded 

that deciding joint-employer allegations 

under its stated standard would not 

always be an easy task, id., slip op. at 

12, but implicitly concluded that the 

benefit of bringing all possible employer 

parties to the bargaining table justified 

its new standard. 

In dissent, two members argued that 

the majority’s new relaxed jointemployer standard was contrary to the 

common law and unwise as a matter of 

policy. In particular, the BrowningFerris dissenters argued that by 

permitting a joint-employer finding 

based solely on indirect impact, the 

majority had effectively resurrected 

intertwined theories of ‘‘economic 

realities’’ and ‘‘statutory purpose’’ 

endorsed by the Supreme Court in 

NLRB v. Hearst Publications, 322 U.S. 

111 (1944), but rejected by Congress 

soon thereafter. In Hearst, the Supreme 

Court went beyond common-law 

principles and broadly interpreted the 

Act’s definition of ‘‘employee’’ with 

reference to workers’ economic 

dependency on a putative employer in 

light of the Act’s goal of minimizing 

industrial strife. In response, Congress 

enacted the Taft-Hartley Amendments 

of 1947, excluding ‘‘independent 

contractors’’ from the Act’s definition of 

‘‘employee’’ and making clear that 

common-law principles control. 

Additionally, the Browning-Ferris 

dissenters disagreed with the majority’s 

understanding of the common law of 

joint-employment relationships. The 

dissenters argued that the ‘‘right to 

control’’ in the joint-employment 

context requires some exercise of direct 

and immediate control. 

Then, accepting for argument’s sake 

that the common law does not preclude 

the relaxed standard of Browning-Ferris, 

the dissenters found that practical 

considerations counseled against its 

adoption. They found the relaxed 

standard to be impermissibly vague and 

asserted that the majority had failed to 

provide adequate guidance regarding 

how much indirect or reserved authority 

might be sufficient to establish a jointemployment relationship. Additionally, 

the dissenters believed that the 

majority’s test would ‘‘actually foster 

substantial bargaining instability by 

requiring the nonconsensual presence of 

too many entities with diverse and 

conflicting interests on the ‘employer’ 

side.’’ Id., slip op. at 23. 

The Browning-Ferris dissenters also 

complained that the relaxed standard 

made it difficult not only to correctly 

identify joint-employer relationships 

but also to determine the bargaining 

obligations of each employer within 

such relationships. Under the relaxed 

standard, an employer is only required 

to bargain over subjects that it controls 

(even if the control is merely indirect). 

The dissenters expressed concern that 

disputes would arise between unions 

and joint employers, and even between 

the two employers comprising the joint 

employer, over which subjects each 

employer-party must bargain. Further, 

the dissenters found such fragmented 

bargaining to be impractical because 

subjects of bargaining are not easily 

severable, and the give-and-take of 

bargaining frequently requires 

reciprocal movement on multiple 

proposals to ultimately reach a 

comprehensive bargaining agreement. 

Finally, the dissenters were suspicious 

about the implications of BrowningFerris for identifying an appropriate 

bargaining unit in cases involving a 

single supplier employer that contracts 

with multiple user employers and with 

potential subversion of the Act’s 

protection of neutral employers from 

secondary economic pressure exerted by 

labor unions. Accordingly, the 

dissenters would have adhered to Board 

precedent as reflected in cases such as 

Laerco, TLI, and Airborne Express. 

Recent Developments 

In December 2017, after a change in 

the Board’s composition and while 

Browning-Ferris was pending on appeal 

in the D.C. Circuit, a new Board 

majority overruled Browning-Ferris and 

restored the preexisting standard that 

required proof that a joint employer 

actually exercised direct and immediate 

control in a manner that was neither 

limited nor routine. Hy-Brand Industrial 

Contractors, Ltd., 365 NLRB No. 156 

(2017). Soon thereafter, the charging 

parties in Hy-Brand filed a motion for 

reconsideration. The Board granted that 

motion and vacated its earlier decision 

for reasons unrelated to the substance of 

the joint-employer issue, effectively 

returning the law to the relaxed jointemployer standard adopted in 

Browning-Ferris. Hy-Brand, 366 NLRB 

No. 26 (2018). Subsequently, the Board 

in Hy-Brand denied the respondents’ 

motion for reconsideration and issued a 

decision finding it unnecessary to 

address the joint-employer issue in that 

case because, in any event, the two 

respondents constituted a single 

employer under Board precedent and 

were therefore jointly and severally 

liable for each other’s unfair labor 

practices. 366 NLRB No. 93 (2018); 366 

NLRB No. 94 (2018). As stated above, a 

petition for review of the Board’s 

Browning-Ferris decision remains 

pending in the court of appeals. 

II. Validity and Desirability of 

Rulemaking; Impact Upon Pending 

Cases 

Section 6 of the Act, 29 U.S.C. 156, 

provides, ‘‘The Board shall have 

authority from time to time to make, 

amend, and rescind, in the manner 

prescribed by subchapter II of chapter 5 

of Title 5 [the Administrative Procedure 

Act, 5 U.S.C. 553], such rules and 

regulations as may be necessary to carry 

out the provisions of this Act.’’ The 

Board interprets Section 6 as 


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4As previously stated, Secs. 2(2) and 2(3) of the 

Act define, respectively, ‘‘employer’’ and 

‘‘employee,’’ but neither these provisions nor any 

others in the Act define ‘‘joint employer.’’ 

authorizing the proposed rule and 

invites comments on this issue.4

Although the Board historically has 

made most substantive policy 

determinations through case 

adjudication, the Board has, with 

Supreme Court approval, engaged in 

substantive rulemaking. American 

Hospital Assn. v. NLRB, 499 U.S. 606 

(1991) (upholding Board’s rulemaking 

on appropriate bargaining units in the 

healthcare industry); see also NLRB v. 

Bell Aerospace Co., 416 U.S. 267, 294 

(1974) (‘‘[T]he choice between 

rulemaking and adjudication lies in the 

first instance within the Board’s 

discretion.’’). 

The Board finds that establishing the 

joint-employer standard in rulemaking 

is desirable for several reasons. First, 

given the recent oscillation on the jointemployer standard, the wide variety of 

business relationships that it may affect 

(e.g., user-supplier, contractorsubcontractor, franchisor-franchisee, 

predecessor-successor, creditor-debtor, 

lessor-lessee, parent-subsidiary, and 

contractor-consumer), and the wideranging import of a joint-employer 

determination for the affected parties, 

the Board finds that it would be well 

served by public comment on the issue. 

Interested persons with knowledge of 

these widely varying relationships can 

have input on our proposed change 

through the convenient comment 

process; participation is not limited, as 

in the adjudicatory setting, to legal 

briefs filed by the parties and amici. 

Second, using the rulemaking procedure 

enables the Board to clarify what 

constitutes the actual exercise of 

substantial direct and immediate control 

by use of hypothetical scenarios, some 

examples of which are set forth below, 

apart from the facts of a particular case 

that might come before the Board for 

adjudication. In this way, rulemaking 

will provide unions and employers 

greater ‘‘certainty beforehand as to when 

[they] may proceed to reach decisions 

without fear of later evaluations labeling 

[their] conduct an unfair labor practice,’’ 

as the Supreme Court has instructed the 

Board to do. First National Maintenance 

Corp. v. NLRB, 452 U.S. 666, 679 (1981). 

Third, by establishing the jointemployer standard in the Board’s Rules 

& Regulations, employers, unions, and 

employees will be able to plan their 

affairs free of the uncertainty that the 

legal regime may change on a moment’s 

notice (and possibly retroactively) 

through the adjudication process. NLRB 

v. Wyman-Gordon Co., 394 U.S. 759, 

777 (1969) (‘‘The rule-making procedure 

performs important functions. It gives 

notice to an entire segment of society of 

those controls or regimentation that is 

forthcoming.’’) (Douglas, J., dissenting). 

III. The Proposed Rule 

Under the proposed rule, an employer 

may be considered a joint employer of 

a separate employer’s employees only if 

the two employers share or codetermine 

the employees’ essential terms and 

conditions of employment, such as 

hiring, firing, discipline, supervision, 

and direction. A putative joint employer 

must possess and actually exercise 

substantial direct and immediate control 

over the employees’ essential terms and 

conditions of employment in a manner 

that is not limited and routine. 

The proposed rule reflects the Board’s 

preliminary view, subject to potential 

revision in response to comments, that 

the Act’s purposes of promoting 

collective bargaining and minimizing 

industrial strife are best served by a 

joint-employer doctrine that imposes 

bargaining obligations on putative joint 

employers that have actually played an 

active role in establishing essential 

terms and conditions of employment. 

Stated alternatively, the Board’s initial 

view is that the Act’s purposes would 

not be furthered by drawing into an 

employer’s collective-bargaining 

relationship, or exposing to joint-andseveral liability, a business partner of 

the employer that does not actively 

participate in decisions setting unit 

employees’ wages, benefits, and other 

essential terms and conditions of 

employment. The Board’s preliminary 

belief is that, absent a requirement of 

proof of some ‘‘direct and immediate’’ 

control to find a joint-employment 

relationship, it will be extremely 

difficult for the Board to accurately 

police the line between independent 

commercial contractors and genuine 

joint employers. The Board is inclined 

toward the conclusion that the proposed 

rule will provide greater clarity to jointemployer determinations without 

leaving out parties necessary to 

meaningful collective bargaining. 

The proposed rule is consistent with 

the common law of joint-employer 

relationships. The Board’s requirement 

of exercise of direct and immediate 

control, as reflected in cases such as 

Airborne Express, supra, has been met 

with judicial approval . See, e.g., SEIU 

Local 32BJ v. NLRB, 647 F.3d at 442– 

443. 

The Board believes that the proposed 

rule is likewise consistent with 

Supreme Court precedent and that of 

lower courts, which have recognized 

that contracting enterprises often have 

some influence over the work performed 

by each other’s workers without 

destroying their status as independent 

employers. For example, in NLRB v. 

Denver Building & Construction Trades 

Council, 341 U.S. 675, 689–690 (1951), 

the Supreme Court held that a 

contractor’s exercise of supervision over 

a subcontractor’s work ‘‘did not 

eliminate the status of each as an 

independent contractor or make the 

employees of one the employees of the 

other,’’ emphasizing that ‘‘[t]he business 

relationship between independent 

contractors is too well established in the 

law to be overridden without clear 

language doing so.’’ 

The requirement of ‘‘direct and 

immediate’’ control seems to reflect a 

commonsense understanding that two 

contracting enterprises will, of 

necessity, have some impact on each 

other’s operations and respective 

employees. As explained in Southern 

California Gas Co., 302 NLRB at 461: 

An employer receiving contracted labor 

services will of necessity exercise sufficient 

control over the operations of the contractor 

at its facility so that it will be in a position 

to take action to prevent disruption of its 

own operations or to see that it is obtaining 

the services it contracted for. It follows that 

the existence of such control, is not in and 

of itself, sufficient justification for finding 

that the customer-employer is a joint 

employer of its contractor’s employees. 

Generally a joint employer finding is justified 

where it has been demonstrated that the 

employer-customer meaningfully affects 

matters relating to the employment 

relationship such as hiring, firing, discipline, 

supervision, and direction. 

Notably, the Board is presently 

inclined to find, consistent with prior 

Board cases, that even a putative joint 

employer’s ‘‘direct and immediate’’ 

control over employment terms may not 

give rise to a joint-employer relationship 

where that control is too limited in 

scope. See, e.g., Flagstaff Medical 

Center, 357 NLRB at 667 (dismissing 

joint-employer allegation even though 

putative joint employer interviewed 

applicants and made hiring 

recommendations, evaluated employees 

consistent with criteria established by 

its supplier employer, and disciplined 

supplied employees for unscheduled 

absences); Lee Hospital, 300 NLRB 947, 

948–950 (1990) (putative joint 

employer’s ‘‘limited hiring and 

disciplinary authority’’ found 

insufficient to establish that it ‘‘shares 

or codetermines those matters governing 

the essential terms and conditions of 

employment to an extent that it may be 

found to be a joint employer’’) 

(emphasis added). Cases like Flagstaff 

Medical Center and Lee Hospital are 


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5Even the Browning-Ferris majority 

acknowledged that ‘‘it is certainly possible that in 

a particular case, a putative joint employer’s control 

might extend only to terms and conditions of 

employment too limited in scope or significance to 

permit meaningful collective bargaining.’’ 362 

NLRB No. 186, slip op. at 16. 

6Browning-Ferris Industries of California, Inc., d/ 

b/a BFI Newby Island Recyclery, 362 NLRB No. 186 

(2015), petition for review docketed BrowningFerris Indus. of Cal. v. NLRB, No. 16–1028 (D.C. Cir 

filed Jan. 20, 2016). 

7See Hy-Brand Industrial Contractors, Ltd (HyBrand I), 365 NLRB No. 156 (2017). In a departure 

from what had become established practice, the 

majority there also declined to issue a public notice 

seeking amicus briefing before attempting to reverse 

precedent. See id. at 38–40 (dissenting opinion). 

8See Hy-Brand Industrial Contractors, Ltd., 366 

NLRB No. 26 (2018) (Hy-Brand II), granting 

reconsideration in part and vacating order reported 

at 365 NLRB No. 156 (2017) (Hy-Brand I). See also 

Hy-Brand Industrial Contractors, Ltd., 366 NLRB 

No. 63 (2018) (Hy-Brand III) (order denying motion 

for reconsideration of order vacating). 

9Hy-Brand I was decided by a majority 

comprising then-Chairman Miscimarra, Member 

Kaplan, and Member Emanuel (who was later 

determined to have been disqualified). The majority 

today, proposing what is essentially an identical 

standard in rulemaking, comprises Chairman Ring, 

Member Kaplan, and Member Emanuel. Thus, a 

majority of today’s majority has considered and 

endorsed the proposed outcome of this rulemaking 

process before. 

10The majority observes that under the proposed 

rule, ‘‘fewer employers may be alleged as joint 

employers, resulting in lower costs to some small 

entities.’’ 

11See The Boeing Company, 365 NLRB No.154, 

slip op. at 33–34 (2017) (dissenting opinion); 

Caesars Entertainment Corp. d/b/a Rio All-Suites 

Hotel & Casino, Case 28–CA–060841, Notice & 

Invitation to File Briefs (Aug. 1, 2018) (dissenting 

opinion), available at www.nlrb.gov. 

12After Hy-Brand I was vacated (in Hy-Brand II) 

and after reconsideration of the order vacating was 

denied (in Hy-Brand III), the Chairman announced 

that the Board was contemplating rulemaking on 

the joint-employer standard, as reflected in a 

submission to the Unified Agenda of Federal 

Regulatory and Deregulatory Actions. See NLRB 

Press Release, NLRB Considering Rulemaking to 

Address Joint-Employer Standard (May 9, 2018), 

available at www.nlrb.gov. That step did not reflect 

my participation or that of then-Member Pearce, as 

the press release discloses. 

13See, e.g., May 29, 2018 Letter from Senators 

Warren, Gillibrand, and Sanders to Chairman Ring, 

available at https://www.warren.senate.gov/imo/ 

media/doc/2018.05.29%20Letter%20to

%20NLRB%20on%20Joint%20Employer

%20Rulemaking.pdf (expressing concern that the 

rulemaking effort could be an attempt ‘‘to evade the 

ethical restrictions that apply to adjudications’’). 

Chairman Ring has provided assurances ‘‘that any 

notice-and-comment rulemaking undertaken by the 

NLRB will never be for the purpose of evading 

ethical restrictions.’’ See June 5, 2018 Letter from 

Chairman Ring to Senators Warren, Gillibrand, and 

Sanders at 1, available at https://www.nlrb.gov/ 

news-outreach/news-story/nlrb-chairman-providesresponse-senators-regarding-joint-employer-inquiry. 

Notably, under the Standards of Ethical Conduct 

for Executive Branch Employees, rulemaking 

implicates different recusal considerations than 

does case adjudication, because a rulemaking of 

general scope is not regarded as a ‘‘particular 

matter’’ for purposes of determining disqualifying 

financial interests. See 5 CFR 2635.402. By 

Continued 

consistent with the Board’s present 

inclination to find that a putative joint 

employer must exercise substantial 

direct and immediate control before it is 

appropriate to impose joint and several 

liability on the putative joint employer 

and to compel it to sit at the bargaining 

table and bargain in good faith with the 

bargaining representative of its business 

partner’s employees.5

Accordingly, under the proposed rule, 

there must exist evidence of direct and 

immediate control before a jointemployer relationship can be found. 

Moreover, it will be insufficient to 

establish joint-employer status where 

the degree of a putative joint employer’s 

control is too limited in scope (perhaps 

affecting a single essential working 

condition and/or exercised rarely during 

the putative joint employer’s 

relationship with the undisputed 

employer). 

The proposed rule contains several 

examples, set forth below, to help 

clarify what constitutes direct and 

immediate control over essential terms 

and conditions of employment. These 

examples are intended to be illustrative 

and not as setting the outer parameters 

of the joint-employer doctrine 

established in the proposed rule. 

The Board seeks comment on all 

aspects of its proposed rule. In 

particular, the Board seeks input from 

employees, unions, and employers 

regarding their experience in 

workplaces where multiple employers 

have some authority over the workplace. 

This may include (1) experiences with 

labor disputes and how the extent of 

control possessed or exercised by the 

employers affected those disputes and 

their resolution; (2) experiences 

organizing and representing such 

workplaces for the purpose of collective 

bargaining and how the extent of control 

possessed or exercised by the employers 

affected organizing and representational 

activities; and (3) experiences managing 

such workplaces, including how legal 

requirements affect business practices 

and contractual arrangements. What 

benefits to business practices and 

collective bargaining do interested 

parties believe might result from 

finalization of the proposed rule? What, 

if any, harms? Additionally, the Board 

seeks comments regarding the current 

state of the common law on jointemployment relationships. Does the 

common law dictate the approach of the 

proposed rule or of Browning-Ferris? 

Does the common law leave room for 

either approach? Do the examples set 

forth in the proposed rule provide 

useful guidance and suggest proper 

outcomes? What further examples, if 

any, would furnish additional useful 

guidance? As stated above, comments 

regarding this proposed rule must be 

received by the Board on or before 

November 13, 2018. Comments replying 

to comments submitted during the 

initial comment period must be received 

by the Board on or before November 20, 

2018. 

Our dissenting colleague, who was in 

the majority in Browning-Ferris and in 

the dissent in the first Hy-Brand 

decision, would adhere to the relaxed 

standard of Browning-Ferris and refrain 

from rulemaking. She expresses many of 

the same points made in furtherance of 

her position in those cases. We have 

stated our preliminary view that the 

Act’s policy of promoting collective 

bargaining to avoid labor strife and its 

impact on commerce is not best 

effectuated by inserting into a 

collective-bargaining relationship a 

third party that does not actively 

participate in decisions establishing 

unit employees’ wages, benefits, and 

other essential terms and conditions of 

employment. We look forward to 

receiving and reviewing the public’s 

comments and, afterward, considering 

these issues afresh with the good-faith 

participation of all members of the 

Board. 

VI. Dissenting View of Member Lauren 

McFerran 

Today, the majority resumes the effort 

to overrule the Board’s 2015 jointemployer decision in Browning-Ferris, 

which remains pending on review in the 

United States Court of Appeals for the 

District of Columbia Circuit.6 An initial 

attempt to overrule Browning-Ferris via 

adjudication—in a case where the issue 

was neither raised nor briefed by the 

parties 7—failed when the participation 

of a Board member who was 

disqualified required that the decision 

be vacated.8 Now, the Board majority, 

expressing new support for the value of 

public participation, proposes to codify 

the same standard endorsed in HyBrand I 9 via a different route: 

rulemaking rather than adjudication. 

The majority tacitly acknowledges that 

the predictable result of the proposed 

rule would be fewer joint employer 

findings.10

The Board has recently made or 

proposed sweeping changes to labor law 

in adjudications going well beyond the 

facts of the cases at hand and addressing 

issues that might arguably have been 

better suited to consideration via 

rulemaking.11 Here, in contrast, the 

majority has chosen to proceed by 

rulemaking, if belatedly.12 Reasonable 

minds might question why the majority 

is pursuing rulemaking here and now.13


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pursuing rulemaking rather than adjudication with 

respect to the joint-employer standard, the Board is 

perhaps able to avoid what might otherwise be 

difficult ethical issues, as the Hy-Brand case 

illustrates. See generally Peter L. Strauss, 

Disqualifications of Decisional Officials in 

Rulemaking, 80 Columbia L. Rev. 990 (1980); 

Administrative Conference of the United States, 

Decisional Officials’ Participation in Rulemaking 

Proceedings, Recommendation 80–4 (1980). 

14See Jeffrey M. Hirsch, Defending the NLRB: 

Improving the Agency’s Success in the Federal 

Courts of Appeals, 5 FIU L. Rev. 437, 457 (2010) 

(explaining that rulemaking at the Board would 

consume significant resources, especially ‘‘given 

that the NLRB is banned from hiring economic 

analysts’’). 

What is striking here is that the Board majority 

has opted to use this resource-intensive process to 

address an issue that has never been addressed 

through rulemaking before, and that the majority 

observes is implicated in fewer than one percent of 

Board filings and (by the majority’s own analysis) 

directly affects only ‘‘.028% of all 5.9 million 

business firms.’’ The majority observes that the 

number of employers affected is ‘‘very small.’’ In 

contrast for example, consider the standards 

governing employer rules and handbooks at issue 

in Boeing, supra, which presumably affect the 

overwhelming number of private-sector employers 

in the country, but which the Board majority chose 

to establish by adjudication and without public 

participation. 

15National Labor Relations Act, Sec. 1, 29 U.S.C. 

151. 

16As the Board recently observed in Hy-Brand II, 

because the original Hy-Brand decision and order 

was vacated, the ‘‘overruling of the Browning-Ferris 

decision is of no force or effect.’’ 366 NLRB No. 26, 

slip op. at 1. The majority here states that ‘‘[i]n 

February 2018, the Board vacated its December 

2017 decision [in Hy-Brand], effectively changing 

the law back again to the relaxed standard of 

Browning-Ferris.’’ 

17To the extent that the majority is relying on 

anything other than anecdotal evidence of this 

alleged uncertainty, it is required to let the public 

know the evidentiary basis of its conclusion. ‘‘It is 

not consonant with the purpose of a rule-making 

proceeding to promulgate rules on the basis of 

inadequate data, or on data that, to a critical degree, 

is known only to the agency.’’ Portland Cement 

Ass’n v. Ruckelshaus, 486 F.2d 375, 393 (D.C. Cir. 

1973). 

18See generally Bowen v. Georgetown University 

Hospital, 488 U.S. 204 (1988). There is no 

indication in Sec. 6 of the National Labor Relations 

Act that Congress intended to give the Board 

authority to promulgate retroactive rules. Sec. 6 

authorizes the Board ‘‘to make . . . in the manner 

prescribed by [the Administrative Procedure Act] 

. . . such rules and regulations as may be necessary 

to carry out the provisions of’’ the National Labor 

Relations Act. 29 U.S.C. 156. The Administrative 

Procedure Act defines a ‘‘rule’’ as an ‘‘agency 

statement of general or particular applicability and 

future effect. . . .’’ 5 U.S.C. 551(4) (emphasis 

added). See also See June 5, 2018 Letter from 

Chairman Ring to Senators Warren, Gillibrand, and 

Sanders at 2, available at https://www.nlrb.gov/ 

news-outreach/news-story/nlrb-chairman-providesresponse-senators-regarding-joint-employer-inquiry 

(acknowledging that ‘‘final rules issued through 

notice-and-comment rulemaking are required by 

law to apply prospectively only’’). 

19 If the District of Columbia Circuit were to 

uphold the Board’s Browning-Ferris standard (in 

whole or in part) as compelled by—or at least 

consistent with—the Act, but the Board, through 

rulemaking, rejected Browning-Ferris (in whole or 

in part) as not permitted by the Act, then the 

Board’s final rule would be premised on a legal 

error. Moreover, insofar as the court might hold the 

Browning-Ferris standard to be permitted by the 

Act, then the reasons the Board gave for not 

adopting that standard would have to be consistent 

with the court’s understanding of statutory policy 

and common-law agency doctrine insofar as they 

govern the joint-employer standard. 

20 362 NLRB No. 186, slip op. at 12–17. Notably, 

the Browning-Ferris Board rejected a broader 

revision of the joint-employer standard advocated 

by the General Counsel because it might have 

suggested ‘‘that the applicable inquiry is based on 

‘industrial realities’ rather than the common law.’’ 

362 NLRB No. 186, slip op. at 13 fn. 68. The 

General Counsel had urged the Board to find jointemployer status: 

where, under the totality of the circumstances, 

including the way the separate entities have 

structured their commercial relationships, the 

putative joint employer wields sufficient influence 

over the working conditions of the other entity’s 

employees such that meaningful collective 

bargaining could not occur in its absence. 

Id. 

21This approach, as the Browning-Ferris Board 

explained, was consistent with the Board’s 

traditional joint-employer doctrine, as it existed 

It is common knowledge that the 

Board’s limited resources are severely 

taxed by undertaking a rulemaking 

process.14 But whatever the rationale, 

and whatever process the Board may 

use, the fact remains that there is no 

good reason to revisit Browning-Ferris, 

much less to propose replacing its jointemployer standard with a test that fails 

the threshold test of consistency with 

the common law and that defies the 

stated goal of the National Labor 

Relations Act: ‘‘encouraging the practice 

and procedure of collective 

bargaining.’’ 15

A. The Majority’s Justification for 

Revisiting Browning-Ferris Is 

Inadequate. 

Since August 2015, the joint-employer 

standard announced in Browning-Ferris 

has been controlling Board law. It 

remains so today, and the majority 

properly acknowledges as much.16 After 

laying out the checkered history of the 

effort to overrule Browning-Ferris, the 

majority points to the ‘‘continuing 

uncertainty in the labor-management 

community created by these 

adjudicatory variations in defining the 

appropriate joint-employer standard’’ as 

the principal reason for proposing to 

codify not Browning-Ferris (existing 

Board law) but the pre-Browning-Ferris 

standard resurrected in Hy-Brand I. The 

majority cites no evidence of 

‘‘continuing uncertainty in the labormanagement community,’’ 17 and to the 

extent such uncertainty exists, it has 

only itself to blame for the series of 

missteps undertaken in seeking to 

hurriedly reverse BFI. 

More to the point, the best way to end 

uncertainty over the Board’s jointemployer standard would be to adhere 

to existing law, not to upend it. The 

majority’s decision to pursue 

rulemaking ensures the Board’s 

standard will remain in flux as the 

Board develops a final rule and as that 

rule, in all likelihood, is challenged in 

the federal courts. And, of course, any 

final rule could not be given retroactive 

effect, a point that distinguishes 

rulemaking from adjudication.18 Thus, 

cases arising before a final rule is issued 

will nonetheless have to be decided 

under the Browning-Ferris standard. 

The majority’s choice here is 

especially puzzling given that 

Browning-Ferris remains under review 

in the District of Columbia Circuit. 

When the court’s decision issues, it will 

give the Board relevant judicial 

guidance on the contours of a 

permissible joint-employer standard 

under the Act. The Board would no 

doubt benefit from that guidance, even 

if it was not required to follow it. Of 

course, if the majority’s final rule could 

not be reconciled with the District of 

Columbia Circuit’s Browning-Ferris 

decision, it presumably would not 

survive judicial review in that court.19

The Board majority thus proceeds at its 

own risk in essentially treating 

Browning-Ferris as a dead letter. 

B. The Proposed Rule Is Inconsistent 

With Both the Common Law and the 

Goals of the NLRA 

No court has held that BrowningFerris does not reflect a reasonable 

interpretation of the National Labor 

Relations Act. Nor does the majority 

today assert that its own, proposed 

joint-employer standard is somehow 

compelled by the Act. As the majority 

acknowledges, the ‘‘Act does not 

contain the term ‘joint employer,’ much 

less define it.’’ The majority also 

acknowledges, as it must, that ‘‘it is 

clear that the Board’s joint-employer 

standard . . . must be consistent with 

common law agency doctrine.’’ The 

joint-employer standard adopted in 

Browning-Ferris, of course, is predicated 

on common-law agency doctrine, as the 

decision explains in careful detail.20 As 

the Browning-Ferris Board observed: 

In determining whether a putative joint 

employer meets [the] standard, the initial 

inquiry is whether there is a common-law 

employment relationship with the employees 

in question. If this common-law employment 

relationship exists, the inquiry then turns to 

whether the putative joint employer 

possesses sufficient control over employees’ 

essential terms and conditions of 

employment to permit meaningful collective 

bargaining. 

362 NLRB No. 186, slip op. at 2 

(emphasis added).21


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before 1984. 362 NLRB No. 186, slip op. at 8–11. 

In tracing the evolution of the Board’s jointemployer standard, the Browning-Ferris Board 

observed that: 

Three aspects of that development seem clear. 

First, the Board’s approach has been consistent with 

the common-law concept of control, within the 

framework of the National Labor Relations Act. 

Second, before the current joint-employer standard 

was adopted, the Board (with judicial approval) 

generally took a broader approach to the concept of 

control. Third, the Board has never offered a clear 

and comprehensive explanation for its jointemployer standard, either when it adopted the 

current restrictive test or in the decades before. 

Id. at 8. 

22TLI, Inc., 271 NLRB 798 (1984), enfd. mem. 772 

F.2d 894 (3d Cir. 1985), and Laerco Transportation, 

269 NLRB 324 (1984). 

23Charlotte Garden & Joseph E. Slater, Comments 

on Restatement of Employment Law (Third), 

Chapter 1, 21 Employee Rights & Employment 

Policy Journal 265, 276 (2017). 

24 Id. at 276–277. 

Id. 

25Browning-Ferris, supra, 362 NLRB No. 186, slip 

op. at 2 (emphasis in original). 

26 Id. at 13–14. See also Hy-Brand I, supra, 365 

NLRB No. 156, slip op. at 42–45 (dissenting 

opinion). 

As to whether authority must be exercised, 

Section 220(1) of the Restatement (Second) of 

Agency defines a ‘‘servant’’ as a ‘‘person employed 

to perform services . . . who with respect to the 

physical conduct in the performance of the services 

is subject to the other’s control or right to control’’ 

(emphasis added). Section 220(2), in turn, identifies 

as a relevant factor in determining the existence of 

an employment relationship ‘‘the extent of control 

which, by the agreement, the master may exercise 

over the details of the work’’ (emphasis added). See, 

e.g., Community for Creative Non-Violence v. Reid, 

490 U.S. 730, 751 (1989) (‘‘In determining whether 

a hired party is an employee under the general 

common law of agency, we consider the hiring 

party’s right to control the manner and means by 

which the product is accomplished.’’); Singer Mfg. 

Co. v. Rahn, 132 U.S. 518, 523 (1889) (observing 

that the ‘‘relation of master and servant exists 

whenever the employer retains the right to direct 

the manner in which the business shall be done’’). 

As to whether control must be direct and 

immediate, the Restatement observes that the 

‘‘control needed to establish the relation of master 

and servant may be very attenuated.’’ Restatement 

(Second) of Agency Section 220(l), comment d. The 

Restatement specifically recognizes the commonlaw ‘‘subservant’’ doctrine, addressing cases in 

which one employer’s control is or may be 

exercised indirectly, while a second employer 

directly controls the employee. Restatement 

(Second) of Agency Sections 5, 5(2), comment e. 

See, e.g., Kelley v. Southern Pacific Co., 419 U.S. 

3218, 325 (1974) (recognizing subservant doctrine 

for purposes of Federal Employers’ Liability Act); 

Allbritton Communications Co. v. NLRB, 766 F.2d 

812, 818–819 (3d Cir. 1985) (applying subservant 

doctrine under National Labor Relations Act), cert. 

denied, 474 U.S. 1081 (1986). 

As to the issue of control that is limited and 

routine, the Restatement makes clear that if an 

entity routinely exercises control ‘‘over the details 

of the work,’’ it is more likely to be a common-law 

employer. See Restatement (Second) of Agency 

Section 220(2)(a). That control might be routine, in 

the sense of not requiring special skill, does not 

suggest the absence of an employment relationship; 

to the contrary, an unskilled worker is more likely 

to be an employee, rather than an independent 

contractor. See id., Section 220(2)(d) and comment 

i. 

27See, e.g., NLRB v. United Insurance Co. of 

America, 390 U.S. 254, 256–258 (1968) (interpreting 

Act’s exclusion of independent contractors from 

coverage). 

28NLRB v. Town & Country Electric, Inc., 516 

U.S. 85, 94 (1995), citing United Insurance, supra, 

390 U.S. at 256. 

29See Hy-Brand I, supra, 365 NLRB No. 156, slip 

op. at 42–47 (dissenting opinion). 

30The majority observes that in some cases, 

courts have upheld the Board’s application of the 

‘‘direct and immediate’’-control restriction. But as 

the Hy-Brand I dissent explained, no federal 

appellate court has addressed the argument that this 

restriction is inconsistent with common-law agency 

principles. 365 NLRB No. 156, slip op. at 46. 

Nor, as the majority suggests, is the restriction 

supported by the Supreme Court’s decision in 

NLRB v. Denver Building & Construction Trades 

Council, 341 NLRB 675 (1951). As the Hy-Brand I 

dissent explained: 

The issue in . . . Denver Building & Construction 

Trades Council . . . was whether (as the Board had 

found) a labor union violated Sec. 8(b)(4)(A) of the 

Act ‘‘by engaging in a strike, an object of which was 

to force the general contractor on a construction 

project to terminate its contract with a certain 

subcontractor on the project.’’ Id. at 677. The 

relevant statutory language prohibits a strike 

‘‘where an object thereof is . . . forcing or requiring 

. . . any employer or other person . . . to cease 

doing business with any other person.’’ Id. at 677 

fn. 1 (citing 29 U.S.C. 158(b)(4)(A), current version 

at 29 U.S.C. 158(b)(4)(i)(B)). The Court agreed with 

the Board’s conclusion that the general contractor 

and the subcontractor were ‘‘doing business’’ with 

each other. Id. at 690. 

It was in that context that the Court observed that 

‘‘the fact that the contractor and the subcontractor 

were engaged on the same construction project, and 

that the contactor had some supervision over the 

subcontractor’s work, did not eliminate the status 

of each as an independent contractor or make the 

employees of one the employees of the other,’’ such 

that the ‘‘doing business’’ element could not be 

satisfied. Id. at 689–690. The Court’s decision in no 

way implicated the common-law test for an 

employment relationship or the Board’s jointemployer standard. As a general matter, to say that 

a general contractor and a subcontractor are 

Continued 

In contrast, the Board’s prior standard 

(which the majority revives today) had 

never been justified in terms of 

common-law agency doctrine. For the 

31 years between 1984 (when the Board, 

in two decisions, narrowed the 

traditional joint-employer standard) 22

and 2015 (when Browning-Ferris was 

decided), the Board’s approach to jointemployer cases was not only 

unexplained, but also inexplicable with 

reference to the principles that must 

inform the Board’s decision-making. 

Common-law agency doctrine simply 

does not require the narrow, preBrowning-Ferris standard to which the 

majority now seeks to return. Nor is the 

‘‘practice and procedure of collective 

bargaining’’ encouraged by adopting a 

standard that reduces opportunities for 

collective bargaining and effectively 

shortens the reach of the Act. 

Thus, it is not surprising that two 

labor-law scholars have endorsed 

Browning-Ferris as ‘‘the better 

approach,’’ ‘‘predicated on common law 

principles’’ and ‘‘consistent with the 

goals of employment law, especially in 

the context of a changing 

economy.’’ 23 Browning-Ferris, the 

scholars observe, ‘‘was not a radical 

departure from past precedent;’’ rather, 

despite ‘‘reject[ing] limitations added to 

the joint employer concept from a few 

cases decided in the 1980s,’’ it was 

‘‘consistent with earlier precedents.’’ 24

The crux of the Browning-Ferris 

decision, and the current majority’s 

disagreement with it, is whether the 

joint-employer standard should require: 

(1) That a joint employer ‘‘not only 

possess the authority to control 

employees’ terms and conditions of 

employment, but also exercise that 

authority;’’ (2) that the employer’s 

control ‘‘must be exercised directly and 

immediately;’’ and (3) that control not 

be ‘‘limited and routine.’’ 25 The 

Browning-Ferris Board carefully 

explained that none of these limiting 

requirements is consistent with 

common-law agency doctrine, as the 

Restatement (Second) of Agency makes 

clear.26 It is the Restatement on which 

the Supreme Court has relied in 

determining the existence of a commonlaw employment relationship for 

purposes of the National Labor 

Relations Act.27 The Court, in turn, has 

observed that the ‘‘Board’s departure 

from the common law of agency with 

respect to particular questions and in a 

particular statutory context, [may] 

render[] its interpretation [of the Act] 

unreasonable.’’ 28

Hy-Brand I impermissibly departed 

from the common law of agency as the 

dissent there demonstrated,29 and the 

majority’s proposed rule does so again. 

Remarkably, the majority makes no 

serious effort here to refute the detailed 

analysis of common-law agency 

doctrine advanced in Browning-Ferris 

and in the Hy-Brand I dissent. The 

majority fails to confront the 

Restatement (Second) of Agency, for 

example, or the many decisions cited in 

Browning-Ferris (and then in the HyBrand I dissent) that reveal that at 

common law, the existence of an 

employment relationship does not 

require that the putative employer’s 

control be (1) exercised (rather than 

reserved); (2) direct and immediate 

(rather than indirect, as through an 

intermediary); and not (3) limited and 

routine (rather than involving routine 

supervision of at least some details of 

the work). None of these restrictions, 

much less all three imposed together, is 

consistent with common-law agency 

doctrine.30


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independent entities (e.g., not a ‘‘single employer’’) 

is not to say that they can never be joint employers, 

if it is proven that the general contractor retains or 

exercises a sufficient degree of control over the 

subcontractor’s workers to satisfy the common-law 

test of an employment relationship. 

Hy-Brand I, supra, 365 NLRB No. 156, slip op. at 

46 fn. 63 (dissenting opinion). 

31With respect to the issue of reserved control, 

the majority acknowledges that ‘‘[o]ver time, the 

Board shifted position, without expressly 

overruling precedent, and held that joint-employer 

status could not be established by the mere 

existence of a clause in a business contract 

reserving to one company authority over its 

business partner’s employees absent evidence that 

such authority had ever been exercised.’’ The 

Board, however, is required to adhere to its 

precedent or to explain why it chooses to deviate 

from it. See, e.g., ABM Onsite Services-West, Inc. v. 

NLRB, 849 F.3d 1137, 1146 (D.C. Cir. 2017). Here, 

too, the Board’s pre-Browning-Ferris approach fell 

short of the standard for reasoned decision-making. 

32Between 1936 and 1939, when the NLRA was 

in its infancy and still meeting massive resistance 

from employers, American employees engaged in 

583 sit-down strikes of at least one day’s duration. 

Jim Pope, Worker Lawmaking, Sit-Down Strikes, 

and the Shaping of American Industrial Relations, 

1935—1938, Law and History Review, Vol. 24, No. 

1 at 45, 46 (Spring 2006). See also NLRB v. Fansteel 

Metallurgical Corp., 306 U.S. 240 (1939). For many 

years after plant occupations were found illegal by 

the Supreme Court, employees resorted to wildcat, 

‘‘quickie,’’ ‘‘stop-and-go,’’ and partial strikes; 

slowdowns; and mass picketing. Id at 108–111. 

33E.g., Michael M. Oswalt, The Right to Improvise 

in Low-Wage Work, 38 Cardozo L. Rev. 959, 961– 

986 (2017); Steven Greenhouse and Jana 

Kasperkevic, Fight For $15 Swells Into Largest 

Protest By Low-wage Workers in US History, The 

Guardian/U.S. News (April 15, 2015); Dominic 

Rushe, Fast Food Workers Plan Biggest US Strike 

to Date Over Minimum Wage, The Guardian/U.S. 

News (September 1, 2014). Strikes, walkouts, and 

other demonstrations of labor unrest have also been 

seen in recent years in the college and university 

setting among graduate teaching assistants and 

similar workers responding to their academic 

employers’ refusal to recognize unions and engage 

in collective bargaining. See, e.g., Danielle DouglasGabrielle, Columbia Graduate Students Strike Over 

Refusal to Negotiate a Contract, The Washington 

Post (April 24, 2018); David Epstein, On Strike: In 

a showdown over TA unions at private universities, 

NYU grad students walk off the job, Inside Higher 

Ed (November 10, 2005). Here, again, the common 

thread is workers resort to more disruptive channels 

when they are denied the ability to negotiate 

directly about decisions impacting their 

employment. 

Instead of demonstrating that its 

proposed rule is consistent with the 

common law (an impossible task), the 

majority simply asserts that it is—and 

then invites public comment on the 

‘‘current state of the common law on 

joint-employment relationships’’ and 

whether the ‘‘common law dictate[s] the 

approach of the proposed rule or of 

Browning-Ferris’’ or instead ‘‘leave[s] 

room for either approach.’’ The answers 

to these questions have been clear for 

quite some time: The restrictive 

conditions for finding joint-employer 

status proposed by the majority simply 

restore the pre-Browning Ferris 

standard, which the Board had never 

presented as consistent with, much less 

compelled by, common-law agency 

doctrine.31 The majority, in short, seeks 

help in finding a new justification for an 

old (and unsupportable) standard. But 

the proper course is for the Board to 

start with first principles, as the 

Browning-Ferris decision did, and then 

to derive the joint-employer standard 

from them. 

Just as the majority fails to reconcile 

the proposed rule with common-law 

agency doctrine—a prerequisite for any 

viable joint-employer standard under 

the National Labor Relations Act—so 

the majority fails to explain how its 

proposed standard is consistent with the 

actual policies of the Act. There should 

be no dispute about what those policies 

are. Congress has told us. Section 1 of 

the Act states plainly that: 

It is declared to be the policy of the United 

States to eliminate the causes of certain 

substantial obstructions to the free flow of 

commerce and to mitigate and eliminate 

those obstructions when they have occurred 

by encouraging the practice and procedure of 

collective bargaining and by protecting the 

exercise of workers of full freedom of 

association, self-organization, and 

designation of representatives of their own 

choosing, for the purpose of negotiating the 

terms and conditions of their employment or 

other mutual aid or protection. 

29 U.S.C. 151 (emphasis added). The 

Supreme Court has explained that: 

Congress’ goal in enacting federal labor 

legislation was to create a framework within 

which labor and management can establish 

the mutual rights and obligations that govern 

the employment relationship. ‘‘The theory of 

the act is that free opportunity for negotiation 

with accredited representatives of employees 

is likely to promote industrial peace and may 

bring about the adjustments and agreements 

which the act in itself does not attempt to 

compel.’’ 

NLRB v. J. Weingarten, Inc., 420 U.S. 

251, 271 (1975) (emphasis added), 

quoting NLRB v. Jones & Laughlin Steel 

Corp., 301 U.S. 1, 45 (1937). 

The Browning-Ferris standard— 

current Board law—clearly 

‘‘encourage[s] the practice and 

procedure of collective bargaining’’ (in 

the words of the Act) by eliminating 

barriers to finding joint-employer 

relationships that have no basis in the 

common-law agency doctrine that 

Congress requires the Board to apply. 

The predictable result is that more 

employees will be able to engage in 

‘‘free opportunities for negotiation’’ (in 

the Supreme Court’s phrase) with the 

employers who actually control the 

terms and conditions of their 

employment—as Congress intended— 

and that orderly collective bargaining, 

not strikes, slowdowns, boycotts, or 

other ‘‘obstructions to the free flow of 

commerce’’ will prevail in jointemployer settings. 

The question for the majority is why 

it would preliminarily choose to 

abandon Browning-Ferris for a standard 

that, by its own candid admission, is 

intended to—and will—result in fewer 

joint employer findings and thus in a 

greater likelihood of economically 

disruptive labor disputes. Where 

collective bargaining under the law is 

not an option, workers have no choice 

but to use other means to improve their 

terms and conditions of employment. 

Economic pressure predictably will be 

directed at the business entities that 

control a workplace, whether or not the 

Board recognizes them as employers. 

History shows that when employees’ 

right to have effective union 

representation is obstructed, they 

engage in alternative and more 

disruptive means of improving their 

terms of employment.32 Resort to such 

economic weapons is hardly a relic of 

the past. Recent examples include 

nationwide strikes by employees unable 

to gain representation in fast food, 

transportation, retail, and other low-pay 

industries, often directed at parent 

companies, franchisors, investors, or 

other entities perceived by the workers 

as having influence over decisions that 

ultimately impact the workers’ wellbeing.33 Congress enacted the NLRA in 

order to minimize the disruption of 

commerce and to provide employees 

with a structured, non-disruptive 

alternative to such action. In blocking 

effective representation by unreasonably 

narrowing the definition of joint 

employer, the majority thwarts that goal 

and invites disruptive economic 

activity. 

The majority does not explain its 

choice in any persuasive way. It asserts 

that codifying the Hy-Brand I, preBrowning-Ferris standard ‘‘will foster 

predictability and consistency regarding 

determinations of joint-employer status 

in a variety of business relationships, 

thereby promoting labor-management 

stability, one of the principal purposes 

of the Act.’’ But, as already suggested, 

‘‘predictability and consistency’’ with 

respect to the Board’s joint-employer 

standard could be achieved just as well 

by codifying the Browning-Ferris 

standard—which, crucially, is both 

consistent with common-law agency 

doctrine and promotes the policy of the 

Act (in contrast to the Hy-Brand I 

standard). 

As for ‘‘labor-management stability,’’ 

that notion does not mean the 

perpetuation of a state in which workers 

in joint-employer situations remain 


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34Auciello Iron Works, Inc. v. NLRB, 517 U.S. 

781, 785 (1996) (emphasis added). 35 29 U.S.C. 151. 36United Insurance, supra, 390 U.S. at 258. See 

also Restatement (Second) of Agency Section 220, 

comment c (‘‘The relation of master and servant is 

one not capable of exact definition. . . . [I]t is for 

the triers of fact to determine whether or not there 

is a sufficient group of favorable factors to establish 

the relation.’’). 

37Hy-Brand I, supra, 365 NLRB No. 156, slip op. 

at 33. 

38 ‘‘Direct and immediate’’ control ‘‘will be 

insufficient,’’ the majority observes, ‘‘where the 

degree of a putative employer’s control is too 

limited in scope (perhaps affecting a single essential 

working condition and/or exercised rarely during 

the putative joint employer’s relationship with the 

undisputed employer).’’ In comparison, BrowningFerris explained that a joint employer ‘‘will be 

required to bargain only with respect to those terms 

and conditions over which it possesses sufficient 

control for bargaining to be meaningful.’’ 362 NLRB 

No. 186, slip op. at 2 fn. 7. The decision 

acknowledged that a ‘‘putative joint employer’s 

control might extend only to terms and conditions 

of employment too limited in scope or significance 

to permit meaningful collective bargaining.’’ Id. at 

16. The difference between the proposed rule and 

Browning-Ferris is that the former treats joint 

employment as an all-or-nothing proposition, while 

the latter permits joint-employer determinations 

that are tailored to particular working arrangements, 

allowing collective bargaining to the extent that it 

can be effective. 

39Of course, illustrating a legal standard is not 

the same as explaining it: In this case, 

demonstrating that the proposed joint-employer 

standard, as illustrated by a particular example, is 

consistent with common-law agency doctrine and 

promotes statutory policies. 

40 ‘‘AG Ferguson Announces Fast-Food Chains 

Will End Restrictions on Low-Wage Workers 

Nationwide,’’ Press Release, Office of the Attorney 

General, Washington State (July 12, 2018) 

(explaining that ‘‘seven large corporate fast-foods 

chains will immediately end a nationwide practice 

that restricts worker mobility and decreases 

competition for labor by preventing workers from 

moving among the chains’ franchise locations’’), 

available at www.atg.wa.gov/news/news-releases; 

‘‘AG Ferguson: Eight More Restaurant Chains Will 

Continued 

unrepresented, despite their desire to 

unionize, because Board doctrine 

prevents it. ‘‘The object of the National 

Labor Relations Act is industrial peace 

and stability, fostered by collectivebargaining agreements providing for the 

orderly resolution of labor disputes 

between workers and employe[r]s.’’ 34

Congress explained in Section 1 of the 

Act that it is the ‘‘denial by some 

employers of the right of employees to 

organize and the refusal by some 

employers to accept the procedure of 

collective bargaining’’ that ‘‘lead to 

strikes and other forms of industrial 

strife or unrest.’’ 35 A joint-employer 

standard that predictably and 

consistently frustrates the desire of 

workers for union representation is a 

recipe for workplace instability—for just 

the sort of conflict that Congress wanted 

to eliminate. Whether it proceeds by 

adjudication or by rulemaking, the 

Board is not free to substitute its own 

idea of proper labor policy for the 

Congressional policy embodied in the 

statute. 

The majority expresses the 

‘‘preliminary belief . . . that absent a 

requirement of proof of some ‘direct and 

immediate’ control to find a jointemployment relationship, it will be 

extremely difficult for the Board to 

accurately police the line between 

independent commercial contractors 

and genuine joint employers.’’ But any 

such difficulty is a function of applying 

common-law agency doctrine, which 

the Board is not free to discard, whether 

in the interests of administrative 

convenience or a so-called predictability 

that insulates employers from labor-law 

obligations. In holding that Congress 

had made common-law agency doctrine 

controlling under the Act, the Supreme 

Court itself has noted the ‘‘innumerable 

situations which arise in the context of 

the common law where it is difficult to 

say whether a particular individual is an 

employee or an independent 

contractor.’’ 36 To quote the Hy-Brand I 

majority, ‘‘[t]he Board is not 

Congress.’’ 37 It is not free to decide that 

the common law is simply too difficult 

to apply, despite the Congressional 

instruction to do so. 

Notably, the majority’s proposed 

inclusion of a ‘‘direct and immediate’’ 

control requirement in the jointemployer standard would hardly result 

in an easy-to-apply test. The majority 

takes pains to say that while the 

exercise of ‘‘direct and immediate’’ 

control is necessary to establish a jointemployer relationship, it is not 

sufficient.38 As for the ‘‘examples’’ set 

forth in the proposed rule, they are 

‘‘intended to be illustrative and not as 

setting the outer parameters of the jointemployer doctrine established in the 

proposed rule.’’ 39 Even with respect to 

those examples that illustrate the 

exercise of ‘‘direct and immediate’’ 

control, the proposed rule does not 

actually state that a joint-employer 

relationship is demonstrated. Here, too, 

the majority’s ostensible goal of 

predictability is elusive. The proposed 

rule, if ultimately adopted by the Board, 

will reveal its true parameters only over 

time, as it is applied case-by-case 

through adjudication. What purpose, 

then, does codifying the Hy-Brand I 

standard via rulemaking actually serve? 

The majority’s examples, rather than 

helping ‘‘clarify’’ what constitutes 

‘‘direct and immediate control,’’ confirm 

that joint employment cannot be 

determined by any simplistic 

formulation, let alone the majority’s 

artificially restrictive one. This is 

because additional circumstances in 

each of the provided examples could 

change the result. In example 1(a), the 

majority declares that under its 

proposed rule a ‘‘cost-plus’’ service 

contract between two businesses that 

merely establishes a maximum 

reimbursable labor expense does not, by 

itself, justify finding that the user 

business exercises direct control. But if, 

under that contract, the user also 

imposes hiring standards; prohibits 

individual pay to exceed that of the 

user’s own employees; determines the 

provider’s working hours and overtime; 

daily adjusts the numbers of employees 

to be assigned to respective production 

areas; determines the speed of the 

worksite’s assembly or production lines; 

conveys productivity instructions to 

employees through the provider’s 

supervisors; or restricts the period that 

provided employees are permitted to 

work for the user—all as in BrowningFerris—does the result change? Would 

some but not all of these additional 

features change the result? If not, under 

common-law principles, why not? 

In example 2(a), the majority declares 

that under its proposed rule, a user 

business does not exercise direct control 

over the provider’s employees simply by 

complaining that the product coming off 

its assembly line worked by those 

employees is defective. Does the result 

change if the user also indicates that it 

believes certain individual employees 

are partly responsible for the defects? Or 

if it also demands those employees’ 

reassignment, discipline, or removal? Or 

if it demands that provided employees 

be allocated differently to different 

sections of the line? 

And in example 6(a), the majority 

declares that where a service contract 

reserves the user’s right to discipline 

provided employees, but the user has 

never exercised that authority, the user 

has not exercised direct control. Again, 

does the result change if the user 

indicates to the supplier which 

employees deserve discipline, and/or 

how employees should be disciplined? 

And, assuming that the actual exercise 

of control is necessary, when is it 

sufficient to establish a joint-employer 

relationship? How many times must 

control be exercised, and with respect to 

how many employees and which terms 

and conditions of employment? 

The majority’s simplified examples, 

meanwhile, neither address issues of 

current concern implicating joint 

employment—such as, for example—the 

recent revelation that national fast-food 

chains have imposed ‘‘no poaching’’ 

restrictions on their franchisees that 

limit the earnings and mobility of 

franchise employees 40—nor accurately 


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End No-Poach Practices Nationwide,’’ Press 

Release, Office of the Attorney General, Washington 

State (Aug. 20, 2018), available at www.atg.wa.gov/ 

news/news-releases. See also generally Rachel 

Abrams, ‘‘Why Aren’t Paychecks Growing? A 

Burger-Joint Clause Offers a Clue,’’ The New York 

Times (Sept. 27, 2017); Alan B. Krueger & Orley C. 

Ashenfelter, ‘‘Theory and Evidence on Employer 

Collusion in the Franchise Sector,’’ Princeton 

University Working Paper No. 614 (Sept. 28, 2017), 

available at http://arks.princeton.edu/ark:/88435/ 

dsp014f16c547g. 

41 In Browning-Ferris, for example, the Board 

found that BFI Newby Island Recyclery (BFI) was 

a joint employer with Leadpoint Business Services 

(Leadpoint) of sorters, screen cleaners, and 

housekeepers at a recycling facility. That finding 

was based on a range of evidence reflecting both 

direct and indirect control, both reserved and 

exercised, over various terms and conditions of 

employment. 

First, the Board found that under its agreement 

with Leadpoint, BFI ‘‘possesse[d] significant control 

over who Leadpoint can hire to work at its facility,’’ 

with respect to both hiring and discipline, and at 

least occasionally exercised that authority in 

connection with discipline. 362 NLRB No. 16, slip 

op. at 18. 

Second, BFI ‘‘exercised control over the processes 

that shape the day-to-day work’’ of the employees, 

particularly with respect to the ‘‘speed of the 

[recycling] streams and specific productivity 

standards for sorting,’’ but also by assigning specific 

tasks that need to be completed, specifying where 

Leadpoint workers were to be positioned, and 

exercising oversight of employees’ work 

performance.’’ Id. at 18–19. (footnote omitted). 

Third, BFI ‘‘played a significant role in 

determining employees’ wages’’ by (1) ‘‘prevent[ing] 

Leadpoint from paying employees more than BFI 

employees performing comparable work; and (2) 

entering into a cost-plus contract with Leadpoint 

coupled with an ‘‘apparent requirement of BFI 

approval over employee pay raises.’’ Id. at 19. 

Example 1(a) of the proposed rule suggests that 

the majority would give no weight to BFI’s cost-plus 

contract, but it is not clear how the majority would 

analyze BFI’s veto power over pay raises. Example 

1(b) suggests that this power might be material. 

Example 2(b), meanwhile, suggests that BFI’s 

control over day-to-day work processes supports a 

joint-employer finding. Finally, Example 6(b), 

apparently would support finding that BFI 

exercised direct and immediate disciplinary control 

over Leadpoint employees. Ironically, then, it is far 

from clear that adoption of the majority’s proposed 

rule would lead to a different result in BrowningFerris. 

42See Representation-Case Procedures, 79 FR 

74308 (2014) (the Board held four days of oral 

hearings with live questioning by Board members 

that resulted in over 1,000 pages of testimony); 

Union Dues Regulations, 57 FR 43635 (1992) (the 

Board held one hearing); Collective-Bargaining 

Units in the Health Care Industry, 53 FR 33900 

(1988), (the Board held four hearings—two in 

Washington, DC, one in Chicago, IL, and one in San 

Francisco, CA—that over the course of 14 days 

resulted in the appearance of 144 witnesses and 

3,545 pages of testimony). 

43See June 5, 2018 Letter from Chairman Ring to 

Senators Warren, Gillibrand, and Sanders, available 

at https://www.nlrb.gov/news-outreach/news-story/ 

nlrb-chairman-provides-response-senatorsregarding-joint-employer-inquiry. 

44Hy-Brand I, supra, 365 NLRB No.156, slip op. 

at 20, 26, 27, and 29. 

45The relationship between Member 

Miscimarra’s dissent in Browning-Ferris and the 

majority opinion in Hy-Brand is examined in a 

February 9, 2018 report issued by the Board’s 

Inspector General, which is posted on the Board’s 

website (‘‘OIG Report Regarding Hy-Brand 

Deliberations’’ available at www.nlrb.gov). 

46E.O. 13272, Sec. 1, 67 FR 53461 (‘‘Proper 

Consideration of Small Entities in Agency 

Rulemaking’’). 

reflect the complicated circumstances 

that the Board typically confronts in 

joint-employer cases, where the issue of 

control is raised with respect to a range 

of employment terms and conditions 

and a variety of forms of control.41

The majority’s examples and their 

possible variations therefore illustrate 

why the issue of joint employment is 

particularly suited to individual 

adjudication under common-law 

principles. As the majority 

acknowledges, ‘‘[t]here are myriad 

relationships between employers and 

their business partners, and the degree 

to which particular business 

relationships impact employees’ 

essential terms and conditions of 

employment varies widely.’’ This being 

true, the majority’s simplistic examples 

are of limited utility in providing 

guidance, and merely serve to illustrate 

the impossibility of predetermining 

with ‘‘clarity’’ all of the situations in 

which a joint employment relationship 

does or does not exist. This is why the 

Board’s best course of action may well 

be to continue to define the contours of 

the correct standard, re-established in 

Browning-Ferris, through the usual 

process of adjudication. This process 

will provide a more nuanced 

understanding of the contours of 

potential joint employment 

relationships that is difficult to achieve 

in the abstract via rulemaking. 

C. The Majority’s Proposed Rulemaking 

Process Is Flawed 

For all of these reasons, I dissent from 

the majority’s decision to issue the 

notice of proposed rulemaking (NPRM). 

To be sure, if the majority is determined 

to revisit Browning-Ferris, then 

permitting public participation in the 

process is preferable to the approach 

taken in the now-vacated Hy-Brand I, 

where the majority overruled BrowningFerris sua sponte and without providing 

the parties or the public with notice and 

an opportunity to file briefs on that 

question. Having chosen to proceed, 

however, the majority should at the very 

least encourage greater public 

participation in the rulemaking process, 

by holding one or more public hearings. 

There is no indication that the Board 

intends to hold a public hearing on the 

proposed rule, in addition to soliciting 

written comments. In the past, the 

Board has held such hearings to 

enhance public participation in the 

rulemaking process,42 and there is no 

good reason why it should not do so 

again. Despite the Chairman’s publicly 

professed desire to hear from 

‘‘thousands of commentators . . . 

including individuals and small 

businesses that may not be able to afford 

to hire a law firm to write a brief for 

them, yet have valuable insight to share 

from hard-won experience,’’ 43 the 

process outlined by the majority—with 

limited time for public comment and no 

public hearings—seems ill-designed to 

provide the broad range of public input 

the majority purportedly seeks. 

Regardless of my views on the 

desirability of rulemaking on the jointemployer standard in the wake of HyBrand I, I will give careful consideration 

to the public comments that the Board 

receives and to the views of my 

colleagues. It is worth recalling that the 

Hy-Brand I majority, in overruling 

Browning-Ferris, asserted that the 

decision ‘‘destabilized bargaining 

relationships and created unresolvable 

legal uncertainty,’’ ‘‘dramatically 

changed labor law sales and 

successorship principles and 

discouraged efforts to rescue failing 

companies and preserve employment,’’ 

‘‘threatened existing franchising 

arrangements,’’ and ‘‘undermined 

parent-subsidiary relationships.’’ 44 The 

Hy-Brand I majority cited no actual 

examples from the Board’s case law 

applying BFI, or empirical evidence of 

any sort, to support its hyperbolic 

claims, instead recycling Member 

Miscimarra’s dissent in Browning-Ferris 

practically verbatim.45 Browning-Ferris 

was issued more than 3 years ago, on 

August 27, 2015. Today’s notice 

specifically solicits empirical evidence 

from the public: information about realworld experiences, not desk-chair 

hypothesizing. And so the question now 

is whether the record in this rulemaking 

ultimately will support the assertions 

made about Browning-Ferris and its 

supposed consequences—or, instead, 

will reveal them to be empty rhetoric. 

V. Regulatory Procedures 

The Regulatory Flexibility Act 

A. Initial Regulatory Flexibility Analysis 

The Regulatory Flexibility Act of 1980 

(‘‘RFA’’), 5 U.S.C. 601, et seq. ensures 

that agencies ‘‘review rules to assess and 

take appropriate account of the potential 

impact on small businesses, small 

governmental jurisdictions, and small 

organizations, as provided by the 

[RFA].’’ 46 It requires agencies 

promulgating proposed rules to prepare 

an Initial Regulatory Flexibility 

Analysis (‘‘IRFA’’) and to develop 

alternatives wherever possible, when 

drafting regulations that will have a 

significant impact on a substantial 


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47 5 U.S.C. 605(b). 

48 5 U.S.C. 601. 

49Small Business Administration Office of 

Advocacy, ‘‘A Guide for Government Agencies: 

How to Comply with the Regulatory Flexibility 

Act’’ (‘‘SBA Guide’’) at 18, https://www.sba.gov/ 

sites/default/files/advocacy/How-to-Comply-withthe-RFA-WEB.pdf. 

50 ‘‘Establishments’’ refer to single location 

entities—an individual ‘‘firm’’ can have one or 

more establishments in its network. The Board has 

used firm level data for this IRFA because 

establishment data is not available for certain types 

of employers discussed below. Census Bureau 

definitions of ‘‘establishment’’ and ‘‘firm’’ can be 

found at https://www.census.gov/programs-surveys/ 

susb/about/glossary.html. 

51The Census Bureau does not specifically define 

small business, but does break down its data into 

firms with 500 or more employees and those with 

fewer than 500 employees. See U.S. Department of 

Commerce, Bureau of Census, 2015 Statistics of 

U.S. Businesses (‘‘SUSB’’) Annual Data Tables by 

Establishment Industry, https://www.census.gov/ 

data/tables/2015/econ/susb/2015-susb-annual.html 

(from downloaded Excel Table entitled ‘‘U.S., 6- 

digit NAICS’’). Consequently, the 500-employee 

threshold is commonly used to describe the 

universe of small employers. For defining small 

businesses among specific industries, the standards 

are defined by the North American Industry 

Classification System (NAICS), which we set forth 

below. 

52Pursuant to 29 U.S.C. 152(6) and (7), the Board 

has statutory jurisdiction over private sector 

employers whose activity in interstate commerce 

exceeds a minimal level. NLRB v. Fainblatt, 306 

U.S. 601, 606–07 (1939). To this end, the Board has 

adopted monetary standards for the assertion of 

jurisdiction that are based on the volume and 

character of the business of the employer. In 

general, the Board asserts jurisdiction over 

employers in the retail business industry if they 

have a gross annual volume of business of $500,000 

or more. Carolina Supplies & Cement Co., 122 

NLRB 88 (1959). But shopping center and office 

building retailers have a lower threshold of 

$100,000 per year. Carol Management Corp., 133 

NLRB 1126 (1961). The Board asserts jurisdiction 

over non-retailers generally where the value of 

goods and services purchased from entities in other 

states is at least $50,000. Siemons Mailing Service, 

122 NLRB 81 (1959). 

The following employers are excluded from the 

NLRB’s jurisdiction by statute: 

• Federal, state and local governments, including 

public schools, libraries, and parks, Federal Reserve 

banks, and wholly-owned government corporations. 

29 U.S.C. 152(2). 

• Employers that employ only agricultural 

laborers, those engaged in farming operations that 

cultivate or harvest agricultural commodities, or 

prepare commodities for delivery. 29 U.S.C. 153(3). 

• Employers subject to the Railway Labor Act, 

such as interstate railroads and airlines. 29 U.S.C. 

152(2). 

53This includes initial representation case 

petitions (RC petitions) and unfair labor practice 

charges (CA cases) filed against employers. 

54Since a joint-employer relationship requires at 

least two employers, we have estimated the number 

of employers by multiplying the number of asserted 

joint-employer relationships by two. Some of these 

filings assert more than two joint employers; but, 

on the other hand, some of the same employers are 

named multiple times in these filings. Additionally, 

this number is certainly inflated because the data 

does not reveal those cases where joint-employer 

status is not in dispute. 

55The Board acknowledges that there are other 

types of entities and/or relationships between 

entities that may be affected by a change in the 

joint-employer rule. Such relationships include but 

are not limited to: Lessor/lessee, and parent/ 

subsidiary. However, the Board does not believe 

that entities involved in these relationships would 

be impacted more than the entities discussed 

below. 

number of small entities. However, an 

agency is not required to prepare an 

IRFA for a proposed rule if the agency 

head certifies that, if promulgated, the 

rule will not have a significant 

economic impact on a substantial 

number of small entities.47 The RFA 

does not define either ‘‘significant 

economic impact’’ or ‘‘substantial 

number of small entities.’’ 48

Additionally, ‘‘[i]n the absence of 

statutory specificity, what is ‘significant’ 

will vary depending on the economics 

of the industry or sector to be regulated. 

The agency is in the best position to 

gauge the small entity impacts of its 

regulations.’’ 49

The Board has elected to prepare an 

IRFA to provide the public the fullest 

opportunity to comment on the 

proposed rule. An IRFA describes why 

an action is being proposed; the 

objectives and legal basis for the 

proposed rule; the number of small 

entities to which the proposed rule 

would apply; any projected reporting, 

recordkeeping, or other compliance 

requirements of the proposed rule; any 

overlapping, duplicative, or conflicting 

Federal rules; and any significant 

alternatives to the proposed rule that 

would accomplish the stated objectives, 

consistent with applicable statutes, and 

that would minimize any significant 

adverse economic impacts of the 

proposed rule on small entities. 

Descriptions of this proposed rule, its 

purpose, objectives, and the legal basis 

are contained earlier in the SUMMARY

and SUPPLEMENTAL INFORMATION sections 

and are not repeated here. 

The Board believes that this rule will 

likely not have a significant economic 

impact on a substantial number of small 

entities. While we assume for purposes 

of this analysis that a substantial 

number of small employers and small 

entity labor unions will be impacted by 

this rule, we anticipate low costs of 

compliance with the rule, related to 

reviewing and understanding the 

substantive changes to the jointemployer standard. There may be 

compliance costs that are unknown to 

the Board; perhaps, for example, 

employers may incur potential increases 

in liability insurance costs. The Board 

welcomes comments from the public 

that will shed light on potential 

compliance costs or any other part of 

this IRFA. 

B. Description and Estimate of Number 

of Small Entities to Which the Rule 

Applies 

In order to evaluate the impact of the 

proposed rule, the Board first identified 

the entire universe of businesses that 

could be impacted by a change in the 

joint-employer standard. According to 

the United States Census Bureau, there 

were approximately 5.9 million 

business firms with employees in 

2015.50 Of those, the Census Bureau 

estimates that about 5,881,267 million 

were firms with fewer than 500 

employees.51 While this proposed rule 

does not apply to employers that do not 

meet the Board’s jurisdictional 

requirements, the Board does not have 

the data to determine the number of 

excluded entities.52 Accordingly, the 

Board assumes for purposes of this 

analysis that the great majority of the 

5,881,267 million small business firms 

could be impacted by the proposed rule. 

The proposed rule will only be 

applied as a matter of law when small 

businesses are alleged to be joint 

employers in a Board proceeding. 

Therefore, the frequency that the issue 

comes before the Board is indicative of 

the number of small entities most 

directly impacted by the proposed rule. 

A review of the Board’s representation 

petitions and unfair labor practice (ULP) 

charges provides a basis for estimating 

the frequency that the joint-employer 

issue comes before the Agency. During 

the five-year period between January 1, 

2013 and December 31, 2017, a total of 

114,577 representation and unfair labor 

practice cases were initiated with the 

Agency. In 1,598 of those filings, the 

representation petition or ULP charge 

filed with the Agency asserted a jointemployer relationship between at least 

two employers.53 Accounting for 

repetitively alleged joint-employer 

relationships in these filings, we 

identified 823 separate joint-employer 

relationships involving an estimated 

1,646 employers.54 Accordingly, the 

joint-employer standard most directly 

impacted approximately .028% of all 

5.9 million business firms (including 

both large and small businesses) over 

the five-year period. Since a large share 

of our joint-employer cases involves 

large employers, we expect an even 

lower percentage of small businesses to 

be most directly impacted by the 

Board’s application of the rule. 

Irrespective of an Agency proceeding, 

we believe the proposed rule may be 

more relevant to certain types of small 

employers because their business 

relationships involve the exchange of 

employees or operational control.55 In 

addition, labor unions, as organizations 

representing or seeking to represent 

employees, will be impacted by the 


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56The only data known to the Board relating to 

contractor business relationships involve 

businesses that contract with the Federal 

Government. In 2014, the Department of Labor 

reported that approximately 500,000 federal 

contractor firms were registered with the General 

Services Administration. Establishing a Minimum 

Wage for Contractors, 79 FR 60634, 60697. 

However, the Board is without the means to 

identify the precise number of firms that actually 

receive federal contracts or to determine what 

portion of those are small businesses as defined by 

the SBA. Even if these data were available, given 

that the Board does not have jurisdiction over 

government entities, business relationships between 

federal contractors and the federal agencies will not 

be impacted by the Board’s joint-employer rule. The 

business relationships between federal contractors 

and their subcontractors could be subject to the 

Board’s joint-employer rule. However, we also lack 

the means for estimating the number of businesses 

that subcontract with federal contractors or 

determine what portion of those would be defined 

as small businesses. Input from the public in this 

regard is welcome. 

57 13 CFR 121.201. 

58The Census Bureau only provides data about 

receipts in years ending in 2 or 7. The 2017 data 

has not been published, so the 2012 data is the most 

recent available information regarding receipts. See 

U.S. Department of Commerce, Bureau of Census, 

2012 SUSB Annual Data Tables by Establishment 

Industry, NAICS classification #561320, https://

www2.census.gov/programs-surveys/susb/tables/ 

2012/us_6digitnaics_r_2012.xlsx. 

59See U.S. Department of Commerce, Bureau of 

Census, 2012 Survey of Business Owners, https:// 

factfinder.census.gov/bkmk/table/1.0/en/SBO/ 

2012/00CSCB46. 

60See International Franchising Establishments 

FAQs, found at https://www.franchise.org/faqsabout-franchising. 

61See U.S. Department of Commerce, Bureau of 

Census, 2012 Survey of Business Owners, https:// 

factfinder.census.gov/bkmk/table/1.0/en/SBO/ 

2012/00CSCB67. 

62See 13 CFR 121.201. 

63 29 U.S.C. 152(5). 

64 13 CFR 121.201. 

65See U.S. Department of Commerce, Bureau of 

Census, 2012 SUSB Annual Data Tables by 

Establishment Industry, NAICS classification 

#722513, https://www2.census.gov/programssurveys/susb/tables/2012/us_6digitnaics_r_

2012.xlsx. 

Board’s change in its joint-employer 

standard. Thus, the Board has identified 

the following five types of small 

businesses or entities as those most 

likely to be impacted by the rule: 

Contractors/subcontractors, temporary 

help service suppliers, temporary help 

service users, franchisees, and labor 

unions. 

(1) Businesses commonly enter into 

contracts with vendors to receive a wide 

range of services that may satisfy their 

primary business objectives or solve 

discrete problems that they are not 

qualified to address. And there are 

seemingly unlimited types of vendors 

who provide these types of contract 

services. Businesses may also 

subcontract work to vendors to satisfy 

their own contractual obligations—an 

arrangement common to the 

construction industry. Businesses that 

contract to receive or provide services 

often share workspaces and sometimes 

share control over workers, rendering 

their relationships subject to application 

of the Board’s joint-employer standard. 

The Board does not have the means to 

identify precisely how many businesses 

are impacted by contracting and 

subcontracting within the U.S., or how 

many contractors and subcontractors 

would be small businesses as defined by 

the SBA.56

(2) Temporary help service suppliers 

(North American Industry Clarification 

System (‘‘NAICS’’) #561320), are 

primarily engaged in supplying workers 

to supplement a client employer’s 

workforce. To be defined as a small 

business temporary help service 

supplier by the SBA, the entity must 

generate receipts of less than $27.5 

million annually.57 In 2012, there were 

13,202 temporary service supplier firms 

in the U.S.58 Of these business firms, 

6,372 had receipts of less than 

$1,000,000; 3,947 had receipts between 

$1,000,000 and $4,999,999; 1,639 had 

receipts between $5,000,000 and 

$14,999,999; and 444 had receipts 

between $15,000,000 and $24,999,999. 

In aggregate, at least 12,402 temporary 

help service supplier firms (93.9% of 

total) are definitely small businesses 

according to SBA standards. Since the 

Board cannot determine how many of 

the 130 business firms with receipts 

between $25,000,000–$29,999,999 fall 

below the $27.5 million annual receipt 

threshold, it will assume that these are 

small businesses as defined by the SBA. 

For purposes of this IRFA, the Board 

assumes that 12,532 temporary help 

service suppliers firms (94.9% of total) 

are small businesses. 

(3) Entities that use temporary help 

services in order to staff their businesses 

are widespread throughout many types 

of industries, and include both large and 

small employers. A 2012 survey of 

business owners by the Census Bureau 

revealed that at least 266,006 firms 

obtained staffing from temporary help 

services in that calendar year.59 This 

survey provides the only gauge of 

employers that obtain staffing from 

temporary help services and the Board 

is without the means to estimate what 

portion of those are small businesses as 

defined by the NAICS. For purposes of 

this IRFA, the Board assumes that all 

users of temporary services are small 

businesses. 

(4) Franchising is a method of 

distributing products or services, in 

which a franchisor lends its trademark 

or trade name and a business system to 

a franchisee, which pays a royalty and 

often an initial fee for the right to 

conduct business under the franchisor’s 

name and system.60 Franchisors 

generally exercise some operational 

control over their franchisees, which 

renders the relationship subject to 

application of the Board’s jointemployer standard. The Board does not 

have the means to identify precisely 

how many franchisees operate within 

the U.S., or how many are small 

businesses as defined by the SBA. A 

2012 survey of business owners by the 

Census Bureau revealed that at least 

507,834 firms operated a portion of their 

business as a franchise. But, only 

197,204 of these firms had paid 

employees.61 In our view, only 

franchisees with paid employees are 

potentially impacted by the jointemployer standard. Of the franchisees 

with employees, 126,858 (64.3%)) had 

sales receipts totaling less than $1 

million. Based on this available data 

and the SBA’s definitions of small 

businesses, which generally define 

small businesses as having receipts well 

over $1 million, we assume that almost 

two-thirds of franchisees would be 

defined as small businesses.62

(5) Labor unions, as defined by the 

NLRA, are entities ‘‘in which employees 

participate and which exist for the 

purpose . . . of dealing with employers 

concerning grievances, labor disputes, 

wages, rates of pay, hours of 

employment, or conditions of work.’’ 63

By defining which employers are joint 

employers under the NLRA, the 

proposed rule impacts labor unions 

generally, and more directly impacts 

those labor unions that organize the 

specific business sectors discussed 

above. The SBA’s ‘‘small business’’ 

standard for ‘‘Labor Unions and Similar 

Labor Organizations’’ (NAICS #813930) 

is $7.5 million in annual receipts.64 In 

2012, there were 13,740 labor union 

firms in the U.S.65 Of these firms, 

11,245 had receipts of less than 

$1,000,000; 2,022 labor unions had 

receipts between $1,000,000 and 

$4,999,999, and 141 had receipts 

between $5,000,000 and $7,499,999. In 

aggregate, 13,408 labor union firms 

(97.6% of total) are small businesses 

according to SBA standards. 

Based on the foregoing, the Board 

assumes there are 12,532 temporary 

help supplier firms, 197,204 franchise 

firms, and 13,408 union firms that are 

small businesses; and further that all 

266,006 temporary help user firms are 

small businesses. Therefore, among 

these four categories of employers that 

are most interested in the proposed rule, 

489,150 business firms are assumed to 

be small businesses as defined by the 


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66See Mid-Tex Elec. Co-op v. FERC, 773 F.2d 327, 

342 (D.C. Cir. 1985) (‘‘[I]t is clear that Congress 

envisioned that the relevant ‘economic impact’ was 

the impact of compliance with the proposed rule on 

regulated small entities.’’). 

67See 5 U.S.C. 603(b)(4), 604(a)(4). 

68See SBA Guide at 37. 

69We do not believe that more than one hour of 

time by each would be necessary to read and 

understand the rule. This is because the new 

standard constitutes a return to the pre-BrowningFerris standard with which most employers are 

already knowledgeable if relevant to their 

businesses, and with which we believe labormanagement attorneys are also familiar. 

70For wage figures, see May 2017 National 

Occupancy Employment and Wage Estimates, 

found at https://www.bls.gov/oes/current/oes_

nat.htm. The Board has been administratively 

informed that BLS estimates that fringe benefits are 

approximately equal to 40 percent of hourly wages. 

Thus, to calculate total average hourly earnings, 

BLS multiplies average hourly wages by 1.4. In May 

2017, average hourly wages for labor relations 

specialists (BLS #13–1075) were $31.51. The same 

figure for a lawyer (BLS #23–1011) is $57.33. 

Accordingly, the Board multiplied each of those 

wage figures by 1.4 and added them to arrive at its 

estimate. 

71The RFA explains that in providing initial and 

final regulatory flexibility analyses, ‘‘an agency may 

provide either a quantifiable or numerical 

description of the effects of a proposed rule or 

alternatives to the proposed rule, or more general 

descriptive statements if quantification is not 

practicable or reliable.’’ 5 U.S.C. 607 (emphasis 

added). 

72See SBA Guide at 18. 

73 Id. at 19. 

SBA. We believe that all of these small 

businesses, and also those businesses 

regularly engaged in contracting/ 

subcontracting, have a general interest 

in the rule and would be impacted by 

the compliance costs discussed below, 

related to reviewing and understanding 

the rule. But, as previously noted, 

employers will only be directly 

impacted when they are alleged to be a 

joint employer in a Board proceeding. 

Given our historic filing data, this 

number is very small relative to the 

number of small employers in these five 

categories. 

C. Recordkeeping, Reporting, and Other 

Compliance Costs 

The RFA requires an agency to 

consider the direct burden that 

compliance with a new regulation will 

likely impose on small entities.66 Thus, 

the RFA requires the Agency to 

determine the amount of ‘‘reporting, 

recordkeeping and other compliance 

requirements’’ imposed on small 

entities.67

We conclude that the proposed rule 

imposes no capital costs for equipment 

needed to meet the regulatory 

requirements; no costs of modifying 

existing processes and procedures to 

comply with the proposed rule; no lost 

sales and profits resulting from the 

proposed rule; no changes in market 

competition as a result of the proposed 

rule and its impact on small entities or 

specific submarkets of small entities; 

and no costs of hiring employees 

dedicated to compliance with regulatory 

requirements.68 The proposed rule also 

does not impose any new information 

collection or reporting requirements on 

small entities. 

Small entities may incur some costs 

from reviewing the rule in order to 

understand the substantive changes to 

the joint-employer standard. We 

estimate that a labor compliance 

employee at a small employer who 

undertook to become generally familiar 

with the proposed changes may take at 

most one hour to read the summary of 

the rule in the introductory section of 

the preamble. It is also possible that a 

small employer may wish to consult 

with an attorney which we estimated to 

require one hour as well.69 Using the 

Bureau of Labor Statistics’ estimated 

wage and benefit costs, we have 

assessed these labor costs to be 

$124.37.70

As for other potential impacts, it is 

possible that liability and liability 

insurance costs may increase for small 

entities because they may no longer 

have larger entities with which to share 

the cost of any NLRA backpay remedies 

ordered in unfair labor practice 

proceedings. Such a cost may arguably 

fall within the SBA Guide’s category of 

‘‘extra costs associated with the 

payment of taxes or fees associated with 

the proposed rule.’’ Conversely, fewer 

employers may be alleged as joint 

employers, resulting in lower costs to 

some small entities. The Board is 

without the means to quantify such 

costs and welcomes any comment or 

data on this topic.71 Nevertheless, we 

believe such costs are limited to very 

few employers, considering the limited 

number of Board proceedings where 

joint-employer status is alleged, as 

compared with the number of 

employers subject to the Board’s 

jurisdiction. Moreover, the proposed 

rule may make it easier for employers to 

collectively bargain without the 

complications of tri-partite bargaining, 

and further provide greater certainty as 

to their bargaining responsibilities. We 

consider such positive impacts as either 

indirect, or impractical to quantify, or 

both. 

As to the impact on unions, we 

anticipate they may also incur costs 

from reviewing the rule. We believe a 

union would consult with an attorney, 

which we estimate to require no more 

than one hour of time ($80.26, see n.45) 

because union counsel should already 

be familiar with the pre-Browning-Ferris 

standard. Additionally, the Board 

expects that the additional clarity of the 

proposed rule will serve to reduce 

litigation expenses for unions and other 

small entities. Again, the Board 

welcomes any data on any of these 

topics. 

The Board does not find the estimated 

$124.37 cost to small employers and the 

estimated $80.26 cost to unions in order 

to review and understand the rule to be 

significant within the meaning of the 

RFA. In making this finding, one 

important indicator is the cost of 

compliance in relation to the revenue of 

the entity or the percentage of profits 

affected.72 Other criteria to be 

considered are the following: 

—Whether the rule will cause long-term 

insolvency, i.e., regulatory costs that 

may reduce the ability of the firm to 

make future capital investment, 

thereby severely harming its 

competitive ability, particularly 

against larger firms; 

—Whether the cost of the proposed 

regulation will (a) eliminate more 

than 10 percent of the businesses’ 

profits; (b) exceed one percent of the 

gross revenues of the entities in a 

particular sector, or (c) exceed five 

percent of the labor costs of the 

entities in the sector.73

The minimal cost to read and 

understand the rule will not generate 

any such significant economic impacts. 

Since the only quantifiable impact 

that we have identified is the $124.37 or 

$80.26 that may be incurred in 

reviewing and understanding the rule, 

we do not believe there will be a 

significant economic impact on a 

substantial number of small entities 

associated with this proposed rule. 

D. Duplicate, Overlapping, or 

Conflicting Federal Rules 

The Board has not identified any 

federal rules that conflict with the 

proposed rule. It welcomes comments 

that suggest any potential conflicts not 

noted in this section. 

E. Alternatives Considered 

Pursuant to 5 U.S.C. 603(c), agencies 

are directed to look at ‘‘any significant 

alternatives to the proposed rule which 

accomplish the stated objectives of 

applicable statutes and which minimize 

any significant economic impact of the 

proposed rule on small entities.’’ The 

Board considered two primary 

alternatives to the proposed rules. 

First, the Board considered taking no 

action. Inaction would leave in place 

the Browning-Ferris joint-employer 

standard to be applied in Board 

decisions. However, for the reasons 


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46696 Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Proposed Rules 

74However, there are standards that prevent the 

Board from asserting authority over entities that fall 

below certain jurisdictional thresholds. This means 

that extremely small entities outside of the Board’s 

jurisdiction will not be affected by the proposed 

rule. See CFR 104.204. 

75NLRB v. Nat. Gas Util. Dist. of Hawkins Cty., 

Tenn., 402 U.S. 600, 603–04 (1971) (quotation 

omitted). 

76Legislative history indicates Congress wrote 

this exception to broadly cover many types of 

administrative action, not just those involving 

‘‘agency proceedings of a prosecutorial nature.’’ See 

S. REP. 96–930 at 56, as reprinted in 1980 

U.S.C.C.A.N. 6241, 6296. For the reasons more fully 

explained by the Board in prior rulemaking, 79 FR 

74307, 74468–69 (2015), representation 

proceedings, although not qualifying as 

adjudications governed by the Administrative 

Procedure Act, 5 U.S.C. 552b(c)(1), are nonetheless 

exempt from the PRA under 44 U.S.C. 

3518(c)(1)(B)(ii). 

77A rule is a ‘‘major rule’’ for CRA purposes if 

it will (A) have an annual effect on the economy 

of $100 million or more; (B) cause a major increase 

in costs or prices for consumers, individual 

industries, government agencies, or geographic 

regions; or (C) result in significant adverse effects 

on competition, employment, investment, 

productivity, innovation, or the ability of United 

States–based enterprises to compete with foreignbased enterprises in domestic and export markets. 

5 U.S.C. 804. The proposed rule is a ‘‘major rule’’ 

because, as explained in the discussion of the 

Regulatory Flexibility Act above, the Board has 

estimated that the average cost of compliance with 

the rule would be approximately $124.37 per 

affected employer and approximately $80.26 per 

union. Because there are some 5.9 million 

employers and 13,740 unions that could potentially 

be affected by the rule, the total cost to the economy 

of compliance with the rule will exceed $100 

million ($733,783,000 + $1,102,772.4 = 

$734,885,772.4) in the first year after it is adopted. 

Since the costs of compliance are incurred in 

becoming familiar with the legal standard adopted 

in the proposed rule, the rule would impose no 

additional costs in subsequent years. Additionally, 

the Board is confident that the rule will have none 

of the effects enumerated in 5 U.S.C. 804(2)(B) and 

(C), above. 

stated in Sections II and III above, the 

Board finds it desirable to revisit the 

Browning-Ferris standard and to do so 

through the rulemaking process. 

Consequently, we reject maintaining the 

status quo. 

Second, the Board considered creating 

exemptions for certain small entities. 

This was rejected as impractical, 

considering that an exemption for small 

entities would substantially undermine 

the purpose of the proposed rule 

because such a large percentage of 

employers and unions would be exempt 

under the SBA definitions. Moreover, as 

this rule often applies to relationships 

involving a small entity (such as a 

franchisee) and a large enterprise (such 

as a franchisor), exemptions for small 

businesses would decrease the 

application of the rule to larger 

businesses as well, potentially 

undermining the policy behind this 

rule. Additionally, given the very small 

quantifiable cost of compliance, it is 

possible that the burden on a small 

business of determining whether it fell 

within a particular exempt category 

might exceed the burden of compliance. 

Congress gave the Board very broad 

jurisdiction, with no suggestion that it 

wanted to limit coverage of any part of 

the Act to only larger employers.74 As 

the Supreme Court has noted, ‘‘[t]he 

[NLRA] is federal legislation, 

administered by a national agency, 

intended to solve a national problem on 

a national scale.’’ 75 As such, this 

alternative is contrary to the objectives 

of this rulemaking and of the NLRA. 

Neither of the alternatives considered 

accomplished the objectives of 

proposing this rule while minimizing 

costs on small businesses. Accordingly, 

the Board believes that proceeding with 

this rulemaking is the best regulatory 

course of action. The Board welcomes 

public comment on any facet of this 

IRFA, including issues that we have 

failed to consider. 

Paperwork Reduction Act 

The NLRB is an agency within the 

meaning of the Paperwork Reduction 

Act (PRA). 44 U.S.C. 3502(1) and (5). 

This Act creates rules for agencies when 

they solicit a ‘‘collection of 

information.’’ 44 U.S.C. 3507. The PRA 

defines ‘‘collection of information’’ as 

‘‘the obtaining, causing to be obtained, 

soliciting, or requiring the disclosure to 

third parties or the public, of facts or 

opinions by or for an agency, regardless 

of form or format.’’ 44 U.S.C. 3502(3)(A). 

The PRA only applies when such 

collections are ‘‘conducted or sponsored 

by those agencies.’’ 5 CFR 1320.4(a). 

The proposed rule does not involve a 

collection of information within the 

meaning of the PRA; it instead clarifies 

the standard for determining jointemployer status. Outside of 

administrative proceedings (discussed 

below), the proposed rule does not 

require any entity to disclose 

information to the NLRB, other 

government agencies, third parties, or 

the public. 

The only circumstance in which the 

proposed rule could be construed to 

involve disclosures of information to the 

Agency, third parties, or the public is 

when an entity’s status as a joint 

employer has been alleged in the course 

of Board administrative proceedings. 

However, the PRA provides that 

collections of information related to ‘‘an 

administrative action or investigation 

involving an agency against specific 

individuals or entities’’ are exempt from 

coverage. 44 U.S.C. 3518(c)(1)(B)(ii). A 

representation proceeding under section 

9 of the NLRA as well as an 

investigation into an unfair labor 

practice under section 10 of the NLRA 

are administrative actions covered by 

this exemption. The Board’s decisions 

in these proceedings are binding on and 

thereby alter the legal rights of the 

parties to the proceedings and thus are 

sufficiently ‘‘against’’ the specific 

parties to trigger this exemption.76

For the foregoing reasons, the 

proposed rule does not contain 

information collection requirements that 

require approval by the Office of 

Management and Budget under the 

PRA. 

Congressional Review Act 

The provisions of this rule are 

substantive. Therefore, the Board will 

submit this rule and required 

accompanying information to the 

Senate, the House of Representatives, 

and the Comptroller General as required 

by the Small Business Regulatory 

Enforcement Fairness Act 

(Congressional Review Act or CRA), 5 

U.S.C. 801–808. 

This rule is a ‘‘major rule’’ as defined 

by Section 804(2) of the CRA because it 

will have an effect on the economy of 

more than $100 million, at least during 

the year it takes effect. 5 U.S.C. 

804(2)(A).77 Accordingly, the rule will 

become effective no earlier than 60 days 

after publication of the final rule in the 

Federal Register. 

List of Subjects in 29 CFR Part 103 

Colleges and universities, Health 

facilities, Joint-employer standard, 

Labor management relations, Military 

personnel, Music, Sports. 

Text of the Proposed Rule 

For the reasons discussed in the 

preamble, the Board proposes to amend 

29 CFR part 103 as follows: 

PART 103—OTHER RULES 

■ 1. The authority citation for part 103 

continues to read as follows: 

Authority: 29 U.S.C. 156, in accordance 

with the procedure set forth in 5 U.S.C. 553. 

■ 2. Add § 103.40 to read as follows: 

§ 103.40: Joint employers. 

An employer, as defined by Section 

2(2) of the National Labor Relations Act 

(the Act), may be considered a joint 

employer of a separate employer’s 

employees only if the two employers 

share or codetermine the employees’ 

essential terms and conditions of 

employment, such as hiring, firing, 

discipline, supervision, and direction. A 

putative joint employer must possess 

and actually exercise substantial direct 

and immediate control over the 


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Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Proposed Rules 46697 

employees’ essential terms and 

conditions of employment in a manner 

that is not limited and routine. 

Example 1 to § 103.40. Company A 

supplies labor to Company B. The business 

contract between Company A and Company 

B is a ‘‘cost plus’’ arrangement that 

establishes a maximum reimbursable labor 

expense while leaving Company A free to set 

the wages and benefits of its employees as it 

sees fit. Company B does not possess and has 

not exercised direct and immediate control 

over the employees’ wage rates and benefits. 

Example 2 to § 103.40. Company A 

supplies labor to Company B. The business 

contract between Company A and Company 

B establishes the wage rate that Company A 

must pay to its employees, leaving A without 

discretion to depart from the contractual rate. 

Company B has possessed and exercised 

direct and immediate control over the 

employees’ wage rates. 

Example 3 to § 103.40. Company A 

supplies line workers and first-line 

supervisors to Company B at B’s 

manufacturing plant. On-site managers 

employed by Company B regularly complain 

to A’s supervisors about defective products 

coming off the assembly line. In response to 

those complaints and to remedy the 

deficiencies, Company A’s supervisors 

decide to reassign employees and switch the 

order in which several tasks are performed. 

Company B has not exercised direct and 

immediate control over Company A’s 

lineworkers’ essential terms and conditions 

of employment. 

Example 4 to § 103.40. Company A 

supplies line workers and first-line 

supervisors to Company B at B’s 

manufacturing plant. Company B also 

employs supervisors on site who regularly 

require the Company A supervisors to relay 

detailed supervisory instructions regarding 

how employees are to perform their work. As 

required, Company A supervisors relay those 

instructions to the line workers. Company B 

possesses and exercises direct and immediate 

control over Company A’s line workers. The 

fact that Company B conveys its supervisory 

commands through Company A’s supervisors 

rather than directly to Company A’s line 

workers fails to negate the direct and 

immediate supervisory control. 

Example 5 to § 103.40. Under the terms of 

a franchise agreement, Franchisor requires 

Franchisee to operate Franchisee’s store 

between the hours of 6:00 a.m. and 11:00 

p.m. Franchisor does not participate in 

individual scheduling assignments or 

preclude Franchisee from selecting shift 

durations. Franchisor has not exercised 

direct and immediate control over essential 

terms and conditions of employment of 

Franchisee’s employees. 

Example 6 to § 103.40. Under the terms of 

a franchise agreement, Franchisor and 

Franchisee agree to the particular health 

insurance plan and 401(k) plan that the 

Franchisee must make available to its 

workers. Franchisor has exercised direct and 

immediate control over essential 

employment terms and conditions of 

Franchisee’s employees. 

Example 7 to § 103.40. Temporary Staffing 

Agency supplies 8 nurses to Hospital to cover 

during temporary shortfall in staffing. Over 

time, Hospital hires other nurses as its own 

permanent employees. Each time Hospital 

hires its own permanent employee, it 

correspondingly requests fewer Agencysupplied temporary nurses. Hospital has not 

exercised direct and immediate control over 

temporary nurses’ essential terms and 

conditions of employment. 

Example 8 to § 103.40. Temporary Staffing 

Agency supplies 8 nurses to Hospital to cover 

for temporary shortfall in staffing. Hospital 

manager reviewed resumes submitted by 12 

candidates identified by Agency, participated 

in interviews of those candidates, and 

together with Agency manager selected for 

hire the best 8 candidates based on their 

experience and skills. Hospital has exercised 

direct and immediate control over temporary 

nurses’ essential terms and conditions of 

employment. 

Example 9 to § 103.40. Manufacturing 

Company contracts with Independent 

Trucking Company (‘‘ITC’’) to haul products 

from its assembly plants to distribution 

facilities. Manufacturing Company is the 

only customer of ITC. Unionized drivers— 

who are employees of ITC—seek increased 

wages during collective bargaining with ITC. 

In response, ITC asserts that it is unable to 

increase drivers’ wages based on its current 

contract with Manufacturing Company. 

Manufacturing Company refuses ITC’s 

request to increase its contract payments. 

Manufacturing Company has not exercised 

direct and immediate control over the 

drivers’ terms and conditions of employment. 

Example 10 to § 103.40. Business contract 

between Company and a Contractor reserves 

a right to Company to discipline the 

Contractor’s employees for misconduct or 

poor performance. Company has never 

actually exercised its authority under this 

provision. Company has not exercised direct 

and immediate control over the Contractor’s 

employees’ terms and conditions of 

employment. 

Example 11 to § 103.40. Business contract 

between Company and Contractor reserves a 

right to Company to discipline the 

Contractor’s employees for misconduct or 

poor performance. The business contract also 

permits either party to terminate the business 

contract at any time without cause. Company 

has never directly disciplined Contractor’s 

employees. However, Company has with 

some frequency informed Contractor that 

particular employees have engaged in 

misconduct or performed poorly while 

suggesting that a prudent employer would 

certainly discipline those employees and 

remarking upon its rights under the business 

contract. The record indicates that, but for 

Company’s input, Contractor would not have 

imposed discipline or would have imposed 

lesser discipline. Company has exercised 

direct and immediate control over 

Contractor’s employees’ essential terms and 

conditions. 

Example 12 to § 103.40. Business contract 

between Company and Contractor reserves a 

right to Company to discipline Contractor’s 

employees for misconduct or poor 

performance. User has not exercised this 

authority with the following exception. 

Contractor’s employee engages in serious 

misconduct on Company’s property, 

committing severe sexual harassment of a 

coworker. Company informs Contractor that 

offending employee will no longer be 

permitted on its premises. Company has not 

exercised direct and immediate control over 

offending employee’s terms and conditions of 

employment in a manner that is not limited 

and routine. 

Dated: September 10, 2018. 

Roxanne Rothschild, 

Deputy Executive Secretary. 

[FR Doc. 2018–19930 Filed 9–13–18; 8:45 am] 

BILLING CODE 7545–01–P 


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