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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