Labor & Employment Law Daily NLRB: Cooperative that exercised control over scope of supermarkets’ initial workforce was a joint employer
News
Monday, October 21, 2019

NLRB: Cooperative that exercised control over scope of supermarkets’ initial workforce was a joint employer

By Ronald Miller, J.D.

Applying the Browning-Ferris standard, the Board found the cooperative exercised direct and immediate control over essential terms and conditions of employment of the individual stores’ employees.

Because a cooperative had significant control over the scope and identity of the initial workforce of newly purchased individual supermarkets, and referred to itself as an “employer” in CBAs it reached with a union, it was a joint employer with the individual stores. Applying the Browning-Ferris joint-employer standard, a three-member panel of the NLRB found that the purchase agreement between the cooperative and the nine individual stores bound them to make all offers of employment agreed to on their behalf by the cooperative, and the cooperative was the sole “employer” signatory to CBAs with the union (Seven Seas Union Square, LLC, October 16, 2019).

Newly purchased stores. The cooperative is comprised of corporate members, including the individual stores that own supermarkets. In a bankruptcy proceeding, the cooperative successfully bid on and purchased supermarkets previously owned by A&P, whose employees were represented by various local unions and covered by CBAs. Pursuant to the asset purchase agreement, the cooperative bound itself to agree to engage in good-faith negotiations for modifying the CBAs at the newly purchased supermarkets.

After its purchase, the cooperative sold the individual supermarkets. Pursuant to the purchase agreements between the cooperative and the individual stores, each individual store agreed to be bound by any modified agreement negotiated by the cooperative. The cooperative exercised near-absolute control over negotiations for a common CBA that would cover employees at all the newly purchased supermarkets and bind the individual stores.

Browning-Ferris applied. In determining whether the cooperative was a joint employer, an administrative law judge applied the standard set forth in Hy-Brand Industrial Contractors, Ltd. (Hy-Brand I), in which the Board overruled Browning Ferris Industries of California, Inc.. However, after the ALJ issued his decision, the Board vacated Hy-Brand I and, in Hy-Brand II, declared the overruling of Browning-Ferris had no force or effect. Applying Browning-Ferris, the Board agreed with the ALJ’s finding that the cooperative is a joint employer with each of the individual stores.

Direct and immediate control. As the ALJ found, the cooperative exercised direct and immediate control over essential terms and conditions of employment of the individual stores’ employees. The Board relied on evidence indicating that under the purchase agreements between the cooperative and individual stores, the cooperative had significant control over the scope and identity of each individual store’s initial workforce. The cooperative referred to itself as an “employer” in CBAs it reached with the union. The owners of the individual stores distributed an employee handbook entitled “Key Food Rules & Regulations” (the cooperative). Further, one of the individual store owners testified that he couldn’t do anything without the cooperative when the union asked to deal directly with him to end union handbilling. With this evidence, the Board found that the cooperative was a joint employer of those employees.

“Perfectly clear” successors. Moreover, in a footnote, the Board adopted the ALJ’s findings that the individual stores were “perfectly clear” successors and therefore violated Section 8(a)(5)(and (1) by unilaterally implementing initial employment terms that differed from the predecessor employer’s terms and conditions of employment, including a buyout provision that resulted in the layoff of employees, without first bargaining with the union to impasse.

Work rules. Additionally, in another footnote, the Board found that one of the individual stores unlawfully promulgated work rules (no-solicitation, political activity, loitering, and a catch-all disciplinary prohibition) in response to its employees’ union activity. Contrary to the employer’s contention, the record evidence did not support its defense that the General Counsel failed to prove the rules were implemented after the union activity.

However, the Board dismissed allegations that a second individual store violated Section 8(a)(5) and (1) by unilaterally implementing a new employee rule book, where the General Counsel failed to establish that the rules at issue represented a change in existing terms and conditions of employment.

Interested in submitting an article?

Submit your information to us today!

Learn More
Employment Law Daily

Labor & Employment Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on labor and employment legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.

Free Trial Learn More