Aug 28, 2015

NLRB Reverses Long-Standing Joint-Employer Standard Involving a Staffing Agency

In the classic children’s book “Are You My Mother?” by author P.D. Eastman, a baby bird hatches while its mother is away.  After falling from his nest, the confused young bird sets out on a quest to find her and asks everyone and everything he meets – a cow, a dog, a plane, and more – “are you my mother?”  After a decision yesterday from the National Labor Relations Board (“NLRB”), millions of employees across the U.S. may find themselves similarly wondering, “are you my employer?”

On August 27, 2015, the NLRB reversed its more than 30-year standard for assessing joint-employer status under the National Labor Relations Act (“NLRA”) in Browning-Ferris Industries of California (“Browning-Ferris”), 362 NLRB No. 186.  The issue before the NLRB was whether BFI Newby Island Recyclery (“BFI”) and Leadpoint Business Services (“Leadpoint”) were joint employers whom the Teamsters, Local 350 (“Teamsters”) sought to represent.  The decision focused on the “existence, extent, and object” of an entity’s control over workers.  Specifically, the NLRB scrutinized the terms of BFI’s temporary labor services agreement with Leadpoint, direct control that BFI possessed over essential terms and conditions of employment of the workers supplied by Leadpoint, and BFI’s reserved authority to control such terms and conditions.  Importantly, the NLRB “will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but must also exercise that authority, and do so directly, immediately, and not in a ‘limited and routine’ manner.”  The decision’s broad implications extend to unionized and non-union employers and government agencies such as the Department of Labor and the Equal Employment Opportunity Commission.

Background

BFI and Leadpoint employ separate supervisors and lead workers at BFI’s California facility.  Leadpoint has an HR manager onsite at the BFI facility.  The Agreement between BFI and Leadpoint provides:

  • Leadpoint will recruit, interview, test, and hire personnel to perform the work at the BFI facility;
  • Leadpoint will ensure that its personnel “have the appropriate qualifications,” and BFI has the right to require that the personnel supplied by Leadpoint “meet or exceed [BFI’s] own standard selection procedures and tests.”;
  • Leadpoint has sole responsibility to discipline, evaluate and terminate personnel, but BFI also has the right to “reject any personnel, and . . . discontinue the use of any personnel for any or no reason.”;
  • Leadpoint “solely determines the pay rates,” but BFI must approve “a pay rate in excess of the pay rate for full-time employees of [BFI] who perform similar tasks.”;
  • Leadpoint employees must submit to it a summary of their work hours, but before they are paid, the employees must obtain the signature of an authorized BFI manager that attests to the accuracy of the work hours;
  • Leadpoint employees must sign a statement that they are eligible only for benefits offered by Leadpoint and not eligible for any benefits offered by BFI, and
  • BFI establishes the shift schedules, and Leadpoint provides employees to cover all shifts.

NLRB’s Holding

Based on some of these shared employment responsibilities, the NLRB held that these two, unrelated employers were a joint employer of the same employees under the NLRA.   Specifically, the NLRB held that

two or more entities are joint employers of a single work force . . . if they ‘share or codetermine those matters governing the essential terms and conditions of employment.’ In determining whether a putative joint employer meets this standard, the initial inquiry is whether there is a common-law employment relationship with the employees in question. If this common-law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses sufficient control over the employees’ essential terms and conditions of employment to permit meaningful collective bargaining.

In a strongly worded dissent regarding the decision’s broad implications, Members Philip Miscimarra and Harry Johnson wrote: “no bargaining table is big enough to seat all of the entities that will be potential joint employers under the majority’s new standards.”

Possible Steps to be Taken By Employers

  • Review and revise agreements with suppliers, franchisees, vendors, service providers etc. to include indemnification agreements;
  • Review and revise agreements with staffing companies to ensure that the staffing company has sole control over the essential terms and conditions of employment such as hiring, firing, discipline, supervision, direction of work, hours, and wages for temporary workers, and
  • Establish separate policy manuals, handbooks, work rules, terms and conditions of employment, job descriptions, and pay structures with suppliers, franchisees, vendors, service providers, etc.

To learn more about how the NLRB’s decision may affect your company or if you have any questions regarding these issues, please contact your labor and employment counsel at Smith, Gambrell & Russell, LLP.

This client alert is intended to inform clients and other interested parties about legal matters of current interest and is not intended as legal advice.


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