Wow, this joint employment issue keeps rearing its ugly head, doesn’t it? Last week we looked at joint employment between a franchisor and a franchisee–McDonald’s to be exact. (Click here if you missed that one.) The NLRB is not just looking at joint employment between franchisors and franchisees, though. There is another case, Browning-Ferris, Industries., which the NLRB appears to be using as an opportunity to expand the definition of joint employment. If the NLRB in fact does so, and if it is not stopped via an appeal, such a ruling could have far-reaching implications for most private sector employers. I doubt you need me to tell you that ignorance is not bliss. So what do you need to know about Browning-Ferris Industries? The Emplawyerologist will cover that after the jump…
Here are the key facts. Browning-Ferris Industries is a waste services company in California. In this particular matter, Lead Point services, a Phoenix-based staffing agency, supplied temporary employees to work at one of BFI’s recycleries. No one disputed that Lead Point Services employed those workers. In July, 2013, Teamsters Local 350 filed a petition seeking to represent those workers as part of the same bargaining unit as direct employees at BFI. The union argued that it could not adequately represent the interests of the temporary employees supplied by the staffing company unless Browning was at the table as a joint employer. That was the sole question before the NLRB Regional Director. I have previously written about the well-established standard for determining joint employment. The NLRB has long adhered to that very standard, which, in brief, holds that one company cannot be held responsible for the employment liabilities of another unless it has direct control over the employees in question. (Click here for a more detailed review. ) Adhering to that very standard, the NLRB Regional Director in this matter found a lack of evidence that BFI exercised direct control over the employees surrounded by Lead Point Services. Direct control is generally established by showing that the two (or more) firms co-determine employment matters, such as hiring, firing, discipline, wages, hours, etc. with respect to the employees in question.
The union has appealed the Regional Director’s ruling. The union has argued: a) that in fact there is evidence of BFI exercising direct control over the Lead Point Services employees, and b) the current standard for determining joint employment should be changed. Not only has the NLRB agreed to hear the appeal, it has invited submission of briefs from non-parties on the issue of whether the standard for joint employment should be changed. The logical question though, is changed to what? The union and the NLRB’s General Counsel are pushing for a standard that essentially makes no distinction between direct, indirect, or even potential control over working conditions. In its brief, the NLRB General Counsel Richard F. Griffin, Jr. argues that the current standard “ignores” Congress’ intent to construe the term “employer” broadly and impedes meaningful collective bargaining involving “non-traditional employment agreements”. Mr. Griffin cites as an example of “indirect control” a supplier employer giving employees raises only upon increase in the contract price paid by the supplier/client. As an example of “potential control” he cites the unexercised ability to exert employee control, contained in lease, license or other commercial agreements. Finally, Mr. Griffin’s proposed new standard would allow for a finding of joint employment when the nature of the parties’ relationship effectively gives one party control over the other party’s employees, even if it does not have actual control. Under this proposal, as long as one of these types of control is present, there is joint employment.
Before we go any further, let me make one thing very clear: Even if the NLRB broadens the standard for determining joint employment, in all likelihood it will only apply to issues related to collective bargaining and employees’ rights under the NLRA. In other words, the usual standard requiring direct control would still be in place with respect to discrimination, workplace safety, pre-employment screening and other employment issues, which, in turn means that there would be two different standards for determining joint employment: one for NLRA issues and one for pretty much everything else.
With respect to NLRA issues, under the broad standard proposed by unions and the NLRB General Counsel, very few parties would not be considered an employer. Currently. businesses use staffing companies because they either do not need or do not feel themselves in a position to take on a significant addition to their direct hires. Many companies prefer the flexibility that the temporary staffing model provides. The other upside to this model is that workers who might otherwise be sitting home doing nothing have work — at least for a time. Companies might decide that it is not worth their while to engage a staffing company. Rather than take on more direct hires they may try to make do with fewer workers, which usually means having fewer workers and expecting them to do more with less. If that is true, then unions advocating this approach may actually be causing a completely opposite result of what they are seeking.
Be that as it may, the NLRB has to expect that if it relaxes the standard for finding joint employment, Browning-Ferris will likely appeal that finding and the case will end up in court. Will this case or a similar one get to the Supreme Court? Maybe, if more than one US Circuit Court of Appeals decides the issue and the circuits are split on the issue. Between this case and the McDonald’s case, this will not be the last we will be hearing on joint employment and the NLRB. The Emplawyerologist will be watching and will keep you apprised of new developments.
Tune in next week for lively post-Thanksgiving coverage of a new topic. In the meantime, Happy Thanksgiving and don’t overdo it on the turkey!
If you or your company would like to learn more about co-employment and minimizing joint liability, click here to download my webinar on Joint Employment, which aired at 1 p.m EST Tuesday November 25, 2014.
Disclaimer: This post’s contents are for informational purposes only, are not legal advice and do not create an attorney-client relationship. Always consult with competent local employment counsel on any issues discussed here.
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