The Restatements of Agency and Employment Law were cited in a landmark decision issued by the National Labor Relations Board on August 27.
In overhauling its standard for determining joint-employer status under the National Labor Relations Act, the Board relied significantly upon Restatement Second, Agency, concluding that the common law of agency, as reflected in that Restatement, permitted a broader joint-employer standard than the one currently employed by the Board.
The new standard would allow for a determination of “joint employer” status in cases where employers “share or codetermine those matters governing the essential terms and conditions of employment.” This would require a two part inquiry into whether a common-law employment relationship existed, and, if so, whether the joint employers possessed “sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.” As to the first point, the Board looked to Restatement Second, Agency § 220, noting that “[i]n determining whether a common-law employment relationship exists in cases arising under Federal statutes like the Act, the [U.S. Supreme] Court has regularly looked to the Restatement (Second) of Agency (1958) for guidance.” As to the second point, the Board cited §§ 2 and 220 for the common-law proposition that “the right to control is probative of an employment relationship–whether or not that right is exercised”—a departure from the previous standard.
The Board further concluded that the common law did not require “that control (when it is exercised) must be exercised directly and immediately.” In support of this proposition, the Board looked to Restatement of the Law, Employment Law § 1.04(b), which it quoted in a footnote, and about which it said, “[t]he most recent authoritative effort to restate the common law related to employment is consistent with traditional doctrine and similarly makes clear that direct and immediate control is not required.”
For more about this opinion, see these articles in The New York Times and The Washington Post.