NLRB Redefines Joint Employer Status

The NLRB’s new standard for joint-employer status aims at increasing collective bargaining.

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Good news for unions: the National Labor Relations Board (NLRB) veered from its long-standing standard for assessing joint-employer status under the National Labor Relations Act (NLRA) to increase the reach of collective bargaining in companies with decentralized business units or subcontractor arrangements.

In Browning-Ferris Industries v. Teamsters (Case 32–RC–109684) the NLRB upheld a Third Circuit Court ruling that two or more employers are joint employers when they “share or co-determine those matters governing the essential terms and conditions of employment”.

The case involves a recycling company (BFI), a subcontractor who provides workers, and a union eager to organize a group of sorters, screen cleaners, and housekeepers.

BFI contracts with Leadpoint to supply temporary workers. Their contract states that Leadpoint is the sole employer of those temporary workers, but the NLRB decision nullifies that clause – and that alone has far-reaching implications for other employers with similar contractual relationships.

Who’s the Boss? BFI or Leadpoint?

In the daily operations of the BFI plant, Leadpoint maintained its own supervisory and scheduling oversight for the temporary workers. In other words, BFI managers did not have direct control of Leadpoint’s temporary workers in terms of scheduling, hiring/firing, or discipline; however BFI managers influenced day-to-day performance standards and productivity. Additionally, BFI’s contract with Leadpoint stated that Leadpoint’s personnel:

“…have the appropriate qualifications…consistent with all applicable laws and instructions from [BFI], to perform the general duties of the assigned position. BFI also has the right to request that personnel supplied by Leadpoint meet or exceed [BFI’s] own standard selection procedures and tests.

That contract language gave the NLRB the ammunition they needed to sink BFI’s claim that Leadpoint was the sole employer of those temporary employees. These activities taken together, the NLRB determined, qualifies BFI for joint-employer status because the company directly and indirectly influences the terms and conditions of employment.

BFI was able to have Leadpoint hire, fire, and discipline workers through its contract. BFI controlled the actual production infrastructure of the plant (the on/off switch on the production line, for example). That all spells joint-employer status according to the NLRB’s decision.

Who is a Joint-Employer?

In this decision, the NLRB defines joint employers as those with the authority to control the terms of employment and any employers who can exercise that authority – directly or indirectly. If the subcontractor is merely a stooge doing the bidding of the primary company in terms of employment activities, then those parties are considered joint employers. Contract language be damned.

Joint Employers and Centralized Compliance

According to GovDocs Compliance Counsel, Anne Jakala, Esq., employers should monitor closely the outcomes of any appeals to this case and the highly anticipated outcome of the McDonald’s case that will determine the employer status of a parent corporation and its franchises.

“While this specific case dealt with a company and its contractor, the changing of the definition of what is a ‘joint employer’ has many implications for companies that use temporary workers and franchises. If the set of facts in each case meets the newly expanded definition of ‘joint employer’ then the parent company will be considered a ‘joint employer’ with the contractor, temporary staffing agency, or franchisee. This would allow these parent companies to be brought into labor disputes and violations.”

According to Jakala, the new joint-employer status could force employers to consider centralizing compliance programs to protect itself from labor law violations – and that includes workplace postings.

“A company could be held responsible for the posting obligations in those agencies, contractors, or franchisees. This new definition may now expand their labor rights obligations to those workers – including labor law postings.”

GovDocs Helps Joint Employers Centralize Posting Compliance

If you need to centralize compliance across subcontractor or franchise relationships, contact GovDocs for options that fit your operational needs. We provide ongoing posting compliance to North America’s largest employers including large staffing agencies, corporate franchises, and compartmentalized business units. Each has unique needs requiring tailored compliance programs. Contact us to learn more.

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NLRB Halts Mandatory Arbitration Agreements

One employer’s attempt to bake-in arbitration agreements as a condition of employment left a bad taste in the NLRB’s mouth.

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PJ Cheese, Inc. is part of a Papa John’s Pizza franchise (PJ United, Inc.) that employs more than 3,000 employees in Alabama, Louisiana, Texas, Ohio, Tennessee, Illinois, Missouri, Mississippi, and Virginia.

The employer developed a Dispute Resolution Program (DRP. Pronounced just like it’s spelled.) PJ Cheese intended its DRP to settle employment disputes in arbitration, out of court, and definitely out of the crosshairs of the National Labor Relations Board (NLRB).

Oh, the irony.

Instead, PJ Cheese found their Dispute Resolution Program chewed up and spit out. (PJ Cheese, Inc. and James Sullivan).

The language of PJ Cheese’s Dispute Resolution Program explicitly informed applicants and employees that “submission of an application, acceptance of employment or the continuation of employment by an individual shall be deemed to be acceptance of the Dispute Resolution Program.”

And no signature required! How convenient. The NLRB decision referred to this as a “self-executing document”.

PJ Cheese’s DRP – in big, bold capital letters – further expounded:


Ah, now there’s the problem.

NLRB Affirms Administrative Law Court Ruling

Administrative Law Judge William “Wild Bill” Nelson “Rockefeller” Cates found the language of the DRP to quash workers’ ability to pursue class or collective judicial action allowed under Section 7 of the National Labor Relations Act (NLRA). An arbitration policy like PJ Cheese’s DRP also violated the NLRA by causing workers to believe they are prohibited from filing unfair labor practice charges with the NLRB.

The DRP tried to push workers to settle in arbitration claims such as:

  • Wages
  • Breach of any contract
  • Wrongful termination
  • Sexual harassment
  • Discrimination
  • “Whistleblower” claims

PJ Cheese’s DRP flew too close to the sun, and its cheesy wings melted into gooey defeat when the NLRB affirmed with the judge’s original decision. As a result of the decision, PJ Cheese must:

  • Cease and desist from maintaining a mandatory arbitration agreement that bars employees from filing charges with the NLRB.
  • Rescind the unlawful arbitration agreement or revise it in all of its forms to make clear to employees that the arbitration agreement does not constitute a waiver of their right to take joint, class, or collective actions against their employer or file charges with the NLRB.
  • Notify all current and former employees who were required to sign the unlawful arbitration agreement that it has been rescinded or revised and, if revised, provide them a copy of the revised agreement.
  • Post copies of a Notice to Employees that disclose employees’ rights to not be subject to binding arbitration agreements in lieu of the Section 7 and Section 8 rights under the NLRA.

What the NLRB Ruling on Mandatory Arbitration Means for Employers

Long story short: any mandatory arbitration policy that contains provisions unlawfully prohibiting employees from engaging in protected concerted activities and that leads employees reasonably to believe they are prohibited from filing charges with the NLRB will not stand.

Under federal law, employees have the right to act together with other employees for mutual benefit and protection and to file claims with the NLRB. Therefore, employers in the U.S. cannot maintain nor can they enforce a mandatory and binding arbitration agreement that requires employees, as a condition of employment, to waive the right to maintain class or collective actions in all forums, whether in arbitration or in court.

Have your legal team review your employee arbitration process to ensure it doesn’t run afoul of the NLRA.

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Discussing Job Security is a Protected Activity, NLRB Finds

The NLRB found that an employer violated Section 7 of the NLRA when it fired an employee for discussing job security with a co-worker.

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A vending-machine route driver left work early one Friday without notifying management, which is a violation of company policy. That weekend, she noticed a local ‘help wanted’ ad for a vending-machine route driver. She assumed it was her company that had placed the ad and that she was going to be fired.

When she returned to work the following Monday, she and another route driver discussed the ad. She asked her co-worker if he thought the ad meant their company was going to fire someone, but the co-worker thought she was implying he was going to be fired. The second driver went to the owners of the company and expressed his concern about losing his job.

The owner assured him that he would not be fired and asked why he was worried. The other route driver mentioned his conversation about the ‘help wanted’ ad. The company eventually fired the first driver – the one who ducked out of work on Friday – for gossiping and telling other employees they were going to be fired.

The NLRB Steps In

In a 2-1 majority ruling, the NLRB found that the driver’s termination violated the National Labor Relations Act (NLRA) because discussion of job security concerns with her co-worker were “inherently concerted,” and therefore considered protected concerted activity, even though there wasn’t any evidence that they were “engaged in with the express object of inducing group action.”

Conversations among employees are generally protected when they consider group action. However, the contemplation of group action is not required when the conversation is “inherently concerted.” Since job security discussions, like wages, are a vital conditions of employment, the NLRB held that they are inherently concerted.

The company was ordered to reinstate the driver with full back pay.

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Can Employees Talk About Their Pay?


Protected Concerted Activity and Section 7 of the NLRA

Section 7 of the NLRA protects employees who engage in concerted activity for the purpose of mutual aid or protection. Section 8 of that Act makes it unlawful for an employer to “interfere with, restrain, or coerce” an employee for engaging in such activity.

What Does This Mean For Employers?

Determining whether employee activity is protected under the NLRA ultimately depends on the specific facts of each case. However, it is clear from recent NLRB rulings that taking corrective action based on work-related conversations among employees can lead to trouble with the NLRB.

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The Fight over the NLRB’s Ambush Rule

The National Labor Relations Board (NLRB) issued a final rule amending its union representation procedures to speed up the process between when a union files a representation petition and an election takes place. The rule takes effect April 14, 2015.

The “Ambush Rule”

According to the NLRB, this rule is designed to “remove unnecessary barriers to the fair and expeditious resolution of representation questions.” However, the National Law Review claims the rule:

“…eliminates pre-election evidentiary hearings and requests for review…and expands the personal information relating to employees which employers are required to disclose to unions in voter eligibility lists – the Board will require that telephone numbers, including mobile phone numbers, and email addresses-if available, be included along with employees’ names and addresses, the employee’s work location, shift, and classification.”

Opposition to the Rule

The National Federation of Independent Business, Associated Builders and Contractors, the U.S. Chamber of Commerce, Coalition for a Democratic Workplace and several other groups are challenging the NLRB on this new rule, saying it violates the National Labor Relations Act (NLRA) by taking away an employer’s right to explain the effect of unionizing to employees and brings up privacy concerns.

Oftentimes employers aren’t aware of union organizing activities within their organization until a petition is filed, and, up until that point, the only information they may have received about union representation is from the union itself. The new rule shortens the time employers have to react and provide their own information to employees.

The NLRA allows employers to discuss its feelings about unions with employees, but it does not allow employers to retaliate against employees who support union representation.

The U.S. Senate voted to overturn this federal regulation in favor of a resolution of disapproval, the House is expected to follow suit. However, President Obama has said he will protect the NLRB rule and veto the resolution.

What Does This Mean for Employers?

The law firm of Stoel Rives LLP suggests that employers take a proactive training and communication approach to inform employees about how unionization affects the workplace.

  1. Train managers and supervisors on recognizing the signs of union organizing before the petition is filed. This is an opportunity to keep supervisors involved and engaged so they know how to monitor, report, and legally respond to union activity.
  2. Engage employees in positive communications about the company, its competitive wage and benefit package, its open door policy, and how employees can access management to learn about what’s happening in the company and openly share what they are thinking without an intermediary.
  3. Prepare campaign information materials ahead of time so that they are ready to go when they are need.
  4. Review whether the existing email policy needs to be changed. (Union contract provisions that restrict employee use of company email may no longer be valid.)
  5. Ensure that other necessary policies are in place and up to date, including non-solicitation, social media, and open door/issue resolution policy.

What is a Resolution of Disapproval?

The Congressional Review Act (CRA) was enacted in 1996 as part of the Small Business Regulatory Enforcement Fairness Act (SBREFA). Before a final rule can take effect under this act, the issuing agency must submit a copy of the rule, a statement summarizing the rule, the purpose of the rule, and its proposed effective date to Congress.

Expedited legislative procedures have been established by the CRA for Congress to review regulations issued by federal agencies and, by passing a joint resolution, to overturn a regulation. The resolution of disapproval must be signed by the President, or must be passed over the President’s veto by two-thirds of both the House and Senate.

What are the NLRA and the NLRB?

The National Labor Relations Act (NLRA) protects the rights of private sector employees to organize into trade unions, to engage in collective bargaining, and to take collective action including strike if necessary. The act also created the National Labor Relations Board (NLRB), which is an independent federal agency that protects the rights of private sector employees to join together, with or without a union, to improve their wages and working conditions.

NLRB Tells Space Needle to Stop Unfair Labor Practices

Federal law officers’ claim that Space Needle LLC engaged in unfair labor practices by encouraging employees to resign from their union memberships.

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Space Needle LLC, is a private company owned by the descendants of construction entrepreneur Howard S. Wright, which owns and operates the Seattle Space Needle.

According to the National Labor Relations Board (NLRB), Space Needle LLC violated federal law by:

  • Interfering with union participation by distributing letters to employees encouraging resignation from the union, not paying union dues,
  • Coercing employees into not utilizing payroll deductions,
  • Failing to reinstate union workers after seasonal layoffs.

Collective Bargaining Contract Expires, Leads to Dispute

The conflict started when Space Needle LLC’s collective bargaining contract with union, Unite Here! Local 8, expired and the company quit withholding dues from employee paychecks. They agreed to reinstate the contract, but backed out a few weeks later. During this time, Space Needle management distributed letters to employees advising them of their options in regard to the union – including payment of dues and instructions on how to resign from the union.

NLRB Finds Company Communicated Unlawfully to Employees

According to the NLRB, Space Needle LLC acted in an unlawful manner:

  • Letter distribution happened outside of a contractually established window period for cancellation.
  • Letters notified employees of future window periods for cancelling dues and suggested bypassing those periods by resigning from the union immediately.
  • Letters contained instructions on how to resign from the union and informed employees they could obtain a sample resignation letter from their human resources department.
  • Management attempted to monitor its employees’ responses to these letters by requiring the sample resignation letters be requested directly from human resources or their direct managers.
  • Management unlawfully coerced an employee by telling him that he would face financial consequences if he opted to take advantage of the payroll deduction by stating he would owe six months of back dues.
  • Manipulating the reinstatement of union workers with seniority after seasonal lay-offs.

Space Needle management defends their actions by stating that the information they tracked was necessary for resuming the dues deduction program. The NLRB maintains that by having the resignation form available through human resources, tracking which employees requested the form, as well as which employees provided a completed form to human resources or their manager, placed management in the position of knowing exactly which employees chose to resign their union memberships and those who didn’t, thereby creating a climate of fear and intimidation. A violation of Section 8(a)(1) of the National Labor Relations Act (NLRA).

To the charge of not reinstating laid-off employees, management states that they didn’t have sufficient business to bring back said union workers. A claim that the NLRB disputes, stating Space Needle management unlawfully failed to bring back union employees from layoff because one of the employees assisted the union and engaged in concerted activity.

Space Needle can appeal this decision, but the company hasn’t yet responded to the NLRB decision and order.

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NLRB Rules Employer Memo Violates NLRA

National Labor Relations Board (NLRB) ruled that a New Jersey nursing home violated federal law by posting a memo titled ‘Teamwork and Dignity and Respect’ that asked for staff to get along just days after a turbulent union election.

NLRB vs Care One at Madison Avenue

The employee union, United Healthcare Workers East (1199SEIU), claimed the memo disobeyed the National Labor Relations Act (NLRA) and the NLRB ultimately agreed. The memo referenced the union election and stated that some employees had been threatened and harassed. The memo went on to say that threatening behavior and harassment would not be tolerated and that the company’s workplace violence policy would be enforced. Because of this the NLRB felt that the memo was displayed in response to the recent union activity.

The NLRB noted that “workers have a statutory right to advocate for a union even if the activity ‘annoys or disturbs’ other employees.”

The NLRB maintained the employer did not present valid evidence that any threats or harassment actually took place or that they even attempted to investigate the alleged threats. The NLRB made the determination that employees could reasonably interpret the memo to ban union activity which is a violation of the NLRA.

The employer was ordered to publically display a notice formally revoking the memo, inform employees of their rights under the NLRA, and lay out the steps they will take to safeguard future union organizing activities.

What Employers Need to Know

  • Employers should review their handbooks, policies, and employee agreements to decide if the terminology could be understood as interfering with an employee’s Section 7 rights. The NLRB interprets any vagueness in employee handbooks and policies against the employer, even if there isn’t any evidence that the policy restricted an employee’s actions.
  • Employers may not prohibit employees from discussing salary, benefits, or compensation.
  • Act with discretion during times of union organizing. If policy revisions are necessary, an employer should take action before it has any knowledge of union organizing activity. If an employer is aware of union organizing, they should consult with labor counsel before making any changes.

National Labor Relations Act (NLRA)

The NLRA, enacted in 1935, is a federal law that “protects the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.”

Section 7 states “Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 8(a)(3) [section 158(a)(3) of this title].”

What is Protected Concerted Activity?

Protected Concerted Activity is defined as “a legal term used in labor policy to define employee protection against employer retaliation. It is a legal principle under the subject of the freedom of association.” An example of protected concerted activity is when two or more employees talk to their employer about wages, benefits, working conditions or other conditions of their employment. An individual employee may also engage in protected concerted activity if (s)he is speaking up for a group of employees.

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