Bloomberg Law
Sept. 25, 2019, 8:00 AM

INSIGHT: Right to Control and Employer Status—Is Actual Control Required?

Samuel Estreicher
Samuel Estreicher
New York University School of Law

We write to question the National Labor Relations Board’s (NLRB) premise in its notice of proposed rulemaking that in order to be a joint employer under the National Labor Relations Act, an 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 NLRB acknowledges that its joint-employer standard must be consistent with the common law, as the D.C. Circuit recently reminded the agency in Browning-Ferris Industries of California Inc. v. NLRB, 911 F.3d 1195 (2018) (Browning-Ferris).

The position that direct control is required to find employer status is, in our view, inconsistent with the common law of agency, as is evidenced by the Restatements of Agency as well as treatises and decisions issued prior to New Deal legislation. Those sources make clear that under the common law contractual reservation of authority was sufficient for finding employer status.

The Restatement of Agency, in its first, second, and third iterations, state that an employer “employs [an agent] to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.” A similar definition is found in the Corpus Juris and Ruling Case Law, two treatises published in the early 20th century.

Cases Show Actual Control Not Required

We have found a number of cases that clearly hold that actual control is not required for employer status, that contractual reservation of authority is sufficient. In our review of pre-1930s decisions, we have found no authority to the contrary.

For example, Linnehan v. Rollins was cited in the Ruling Case Law for the proposition that “the ultimate question is not whether the employer actually exercises control over the doing of the work, but whether he has the right to control.” (14 R.C.L. 68; Linnehan v. Rollins, 137 Mass. 123 (1884)).

In Linnehan, the plaintiff sued the owners of an estate after being injured by a falling derrick allegedly caused by the negligence of a worker whose employer, Elston, had a written contract with defendant owners to take down a house in Boston. The contract stated that Elston agreed “to take down the entire building ... or so much thereof as the trustees may request ... . All of said work to be done carefully, and under the direction and subject to the approval of the trustees.”

“Whether an owner of a building retains such control over work to be done and the manner of doing it as to render himself responsible for injuries occasioned by the negligence of a contractor and his employees,“ the state high court held, “depends upon the construction to be given to the contract.” The owner was held liable “for the reasons given in the [jury] instructions,” which rejected actual control as a factor for employer status: “there has been evidence introduced upon the one side and the other, as to the actual control which the trustees, through one of their number, exercised over the work ... [yet] the absolute test is not the exercise of power of control, but the right to exercise power of control.”

Singer Manufacturing Co. v. Rahn

Similarly, in Singer Manufacturing Co. v. Rahn, 132 U.S. 518 (1889), cited in Browning-Ferris, a Minnesota citizen sued a manufacturing company incorporated in New Jersey for personal injuries allegedly inflicted when she was “run down” by a horse and wagon upon which a Singer sewing machine was attached.

The question at issue was whether the driver, Corbett, was an employee of Singer under the contract for purposes of determining Singer’s liability. The contract stated: Corbett “agrees to employ himself under the direction of the said Singer Manufacturing Company, and under such rules and instructions as it, or its manager at Minneapolis, shall prescribe.”

The U.S. Supreme Court upheld the lower court’s determination that Corbett was Singer’s employee, noting: “the company reserves to itself the right of prescribing and regulating, not only what business he shall do, but the manner in which he shall do it, and might, if it saw fit, instruct him what route to take, or even at what speed to drive.”

The court did not mention actual control or look for evidence of it, instead stating that the case turned “upon the construction and effect” of the contract.

The Alabama Supreme Court case Norwood Hospital v. Brown, 122 So. 411 (Ala. 1929), was also cited in Browning-Ferris. In Norwood Hospital, the plaintiff alleged her skin was burned by “regular” hospital nurses applying hot water bottles. In order to find the hospital liable for her injuries, the regular nurses had to be hospital employees.

The court reasoned “the ultimate question in this connection is not whether the employer actually exercised control, but whether it had a right to control.” The court found, “[p]resumptively the regular nurses, retained and paid by defendant, were servants or employees ... . For aught appearing the hospital authorities, or the physician in charge, had a right to control the work of these nurses down to the last detail. These regular nurses at least were employees, not independent contractors.”

Based on our review of the common law precedents, we find that actual control is not required for determining employer status. The NLRB should consider these cases before ruling that the common law requires the actual exercise of control.

It is true the common law authorities do not deal with joint employment, but it would have to be on some basis other than the common law definition of employer for the NLRB to require actual control for finding joint employer status.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Samuel Estreicher is the Dwight D. Opperman Professor of Law at New York University School of Law and the director of the School’s Center for Labor and Employment Law.

Sara Spaur is a third-year law student at NYU who conducted the survey of pre-New Deal common law decisions that underlies this article.

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