HR Management & Compliance

New NLRB standard exposes more employers to union, other pressures

The National Labor Relations Board (NLRB) has adopted a new and broader standard of what constitutes joint employment by taking a stand that abandons a long-accepted standard in favor of one the Board claims better reflects “the current economic landscape.”

The new view of joint employment will bring major change not just to employers using staffing agencies but also to employers that operate on a franchise model or use various kinds of contingent workers, according to attorneys closely watching the Board’s actions.

On August 27, the Board released its 3-2 decision in a case involving Browning-Ferris Industries (BFI) of California, a decision that was much anticipated because of its impact on the meaning of joint employment. The case began in July 2013 when a Teamsters local petitioned to represent workers at a BFI recycling operation in California. Most of the workers were supplied by a staffing company, Leadpoint. The union’s petition named Leadpoint and BFI as joint employers.

An NLRB regional director ruled that BFI wasn’t a joint employer with Leadpoint, and the union appealed to the whole Board. The union argued in favor of a new standard for determining joint employment, and the full Board agreed.

Effect of decision

Brian R. Garrison, a partner of Faegre Baker Daniels LLP in Indianapolis, said any business operating on a franchise model, using workers employed by a staffing agency, or using workers employed by a subcontractor or vendor will feel the effect of the decision.

Under the broader joint-employer standard under the National Labor Relations Act (NLRA), “more businesses will be subject to unfair labor practice charges, unions will have more opportunity to organize workers, and more businesses will be obligated to recognize and bargain with organized labor,” Garrison said.

Brent E. Siler, an attorney with Butler Snow LLP in Memphis, Tennessee, said the decision makes any business entity a potential employer if it has control over the terms and conditions of employment, even if that control is unexercised or is exercised only indirectly.

The decision puts many employers in a difficult position, Siler said, since most businesses with operations covered under the new standard are going to exert some “control”—as the Board defines it—on employees who work in their facilities. He advises employers concerned about the decision to review their staffing or other agreements to make sure that the agreements minimize the control they have.

“It is going to be very difficult for employers to insulate themselves under this standard,” Siler said.

As to what employers should do in light of the Board’s decision, Garrison said it depends on each employer’s business objectives and relationships with the employees of its subcontractors, vendors, and staffing agencies.

“Some employers may decide to cut ties with staffing agencies that provide temporary workers or subcontractors that provide janitorial and security workers and take control of their relationships with those workers by hiring them directly,” Garrison said. “Others may continue their relationships with these business partners and refine them in light of the factors outlined in Browning-Ferris to reduce the likelihood that they are considered joint employers under the NLRA.”

Board’s reasoning

In a statement following the release of the decision, the Board said it found that BFI was a joint employer with Leadpoint because of the “indirect and direct control that BFI possessed over essential terms and conditions of employment of the employees supplied by Leadpoint as well as BFI’s reserved authority to control such terms and conditions.”

The majority opinion states that the NLRB has decided “to revisit and to revise the Board’s joint-employer standard.”

“Our aim today is to put the Board’s joint-employer standard on a clearer and stronger analytical foundation, and, within the limits set out by the [NLRA], to best serve the Federal policy of ‘encouraging the practice and procedure of collective bargaining,’” the opinion states.

Board Chairman Mark Gaston Pearce was joined by members Kent Y. Hirozawa and Lauren McFerran in the majority opinion. Members Philip A. Miscimarra and Harry I. Johnson III dissented.

In their dissent, Miscimarra and Johnson said the decision “rewrites the decades-old test for determining who the ‘employer’ is” by redefining and expanding the “test that makes two separate and independent entities a ‘joint employer’ of certain employees.”

The dissent also points out the extent of the new standard. “This change will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing,” the dissent states.

Leave a Reply

Your email address will not be published. Required fields are marked *