NLRB broadens the meaning of “joint employer”

A new decision came out today from the National Labor Relations Board (NLRB) that will definitely affect the use of temporary workers and may also affect the use of independent contractors by opening the door to their unionization. You can read the NLRB press release here (https://www.nlrb.gov/news-outreach/news-story/board-issues-decision-browning-ferris-industries). That release has a link to the actual 50 page decision in Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015).

In a nutshell, the Browning-Ferris case involved a company, BFI, that had about 60 union employees and 240 temp employees provided by a third party staffing agency. The details are spelled out in the case but seem typical of the way most companies use temps. The union wanted to organize the 240 employees into the 60 worker BFI group and in a decision by the Regional Director, the NLRB first said, no, those workers were the employees of the staffing company and could not be organized with the BFI employees.

On appeal to the NLRB’s full Board, the Board reversed the Regional Director, along with 30 years of decisions that had narrowed the definition of joint employer law.  The NLRB found that BFI was a joint employer and that the union could organize the temporary staffers. The NLRB wrote that:

“two or more statutory employers are joint employers of the same statutory employees 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 employees’ essential terms and conditions of employment to permit meaningful collective bargaining.

… We will no longer require that joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. Reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry. … Nor will we require that, to be relevant to the joint-employer inquiry, a statutory employer’s control must be exercised directly and immediately. If otherwise sufficient, control exercised indirectly-such as through an intermediary-may establish joint-employer status.” (Emphasis added.)

According to the decision, “essential terms and conditions of employment” include “hiring, firing, discipline, supervision, and direction”; wages and hours; the number of workers to be supplied; “controlling scheduling, seniority, and overtime; and assigning work and determining the manner and method of work performance.”

In short, by retaining any right to control over the temp workers (even if the control is not used) the company hiring the temp agency could be found to be a joint employer. If an entity is found to be a joint employer, the company may be required to bargain “with respect to such terms and conditions which it possesses the authority to control.”

The most obvious effect of this ruling is that temp workers can now be included with permanent workers when a union looks to organize a location.  The effects are likely to be much broader, however.  In a long dissent, a minority of the NLRB opposed the decision and argued that the scope of potential employers under the new rule was “virtually unlimited” and provided a sample list of companies that might get swept up in the ruling:

• Insurance companies that require employers to take certain actions with employees in order to comply with policy requirements for safety, security, health, etc.;
• Franchisors;
• Banks or other lenders whose financing terms may require certain performance measurements;
• Any company that negotiates specific quality or product requirements;
• Any company that grants access to its facilities for a contractor to perform services there, and then continuously regulates the contractor’s access to the property for the duration of the contract;
• Any company that is concerned about the quality of the contracted services;
• Consumers or small businesses who dictate times, manner, and some methods of performance of contractors.

In addition, while the case is not directly related to independent contractors, it extends a course of action through which the NLRB is redefining definitions of employee to make just about anyone eligible for employee status and ultimately unionization. This case raises the specter of unionization of independent contractors, something that has been legally prohibited in the past. To understand this, one simply needs to go back to a case against Fed Ex from the fall, (FedEx Home Delivery, 361 NLRB No. 55 (Sep. 30, 2014)) where the NLRB re-wrote the test defining an employee and found that under that new test FedEx‘s independent contractor drivers were employees for the purposes of collective bargaining. In FedEx, the NLRB softened the definition of employee. Today’s Browning-Ferris decision softens the definition of employer by expanding the conditions under which someone is an employer. Together, they suggest an effort to bypass the limitations that prohibited organizing independent contractors by redefining the meaning of employer and employee such that all workers are employees.

It is unclear whether this expansion will survive court scrutiny, but for now it further increases the uncertainty and risks for companies which operate with temp workers, independent contractors, or have any control over the conduct of their vendors, insured or borrowers.