On August 27, 2015, the NLRB expanded the definition of “Joint-Employer” in the context of collective bargaining leaving employers who use temporary agencies exposed to possible collective bargaining requirements for contractor’s employees. In a 3-2 decision, the NLRB once again seeks to cover an ever increasing number of employees which it feels have been “left unprotected by Section 7” this time because they work on a temporary or contingent basis. The Board’s new test for “joint-employer” status removes the prior requirements of the Browning-Ferris test requiring that a joint employer both possess the authority to control employees’ terms and conditions of employment and exercise that authority. Gone too is the requirement that the control must be exercised both directly and immediately in order for the Board to find joint-employer status.
So, what does that mean for a typical manufacturer who contracts some of its jobs through a contract – like a temporary services agreement? Let’s look at a typical temporary services contract scenario.
Assume an employer, let’s call them BFI, owns and operates a recycling facility receiving tons of material every day. The essential part of the business is moving and sorting the materials for recycling or resale. BFI has around 60 employees engaged in work outside the warehouse facility who move and prepare the materials for sorting. So far pretty typical. Now let’s assume that BFI chooses to contract with another employer – let’s call them “Leadpoint” – to provide workers who will perform the actual sorting of materials inside the warehouse facility. These are Leadpoint’s employees – Leadpoint recruits them, hires them, disciplines them, pays them and provides all of their benefits. Leadpoint and BFI have a contract setting out this relationship. Leadpoint and BFI employ separate supervisors over their respective workers and maintain separate human resources departments. Leadpoint hires its own workers but BFI has the right to reject any worker for any or no reason. Leadpoint workers must meet BFI’s drug-free work, safety and general skill standards in order to work at the BFI facility. Employees are paid by Leadpoint after filling out their hourly work logs which must be signed by a BFI representative attesting to their accuracy.
Does all of this sound like a typical temporary services arrangement? Certainly. Under this scenario prior to August 27, 2015 a union wanting to organize Leadpoint’s sorters would seek an election and, if they prevailed, collectively bargain with Leadpoint over the terms and conditions of the represented employees. Move forward one day and now the NLRB finds on the above facts that BFI is a joint-employer and, as such, is also required to collectively bargain with the prevailing union over the terms and conditions of Leadpoint’s employees.
Time will tell how this expansion of the joint-employer test will affect different business relationships such as: franchisors; banks who require certain performance measurements for financing terms; insurance companies that require employers to take certain actions with employees in order to comply with policy requirements for safety, security, health; any company that grants access to its facilities for a contractor to perform services there, and then continuously regulates the contractor’s access to the property. In case you think these are unlikely to be affected, I took this partial list directly from the dissenting opinion warning of the far-reaching consequences of the decision.
So why did the majority expand the joint-employer standard? To quote their opinion:
It is not the goal of the joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace. Such an approach has no basis in the Act or in federal labor policy.
Browning-Ferris Industries of California Inc., FPR-II, LLC d/b/a Leadpoint Business Services, and Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters. 362 NLRB No. 186