Prepare for NLRB’s new joint employer standard — They may be your employees after all!

Browning-Ferris Industries of California, Inc., et al, could provoke a test that sweeps most outsourcing arrangements into joint employment

The National Labor Relations Board (NLRB) is poised to make several decisions that could significantly affect your workplace. Its agenda is unabashedly activist. Its general counsel Richard Griffin, Jr. (who, interestingly, is the former general counsel of the International Union of Operating Engineers) has published advice memoranda that confirm the NLRB’s prosecutorial agenda, including:

  • Increasing scrutiny and involvement in the non-union workplace
  • Expediting the process for conducting union representation elections
  • Broadening a successor company’s obligation to bargain
  • Voiding arbitration agreements with class action prohibitions
  • Restricting confidentiality rules during employer investigations
  • Expanding rights to representation in the nonunion workplace
  • Controlling employer handbooks and policies concerning at-will employment, confidentiality, workplace decorum, social media, and employee use of employer email systems

This agenda is far too much for detailed evaluation in a single article. One pending case is both illustrative and hyper-significant because it affects every business that subcontracts or outsources any function: i.e., 100 percent of American business. Browning-Ferris Industries of California, Inc., et al., v. Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters will turn on the standard for determining joint-employer status — a standard that the NLRB has indicated that it wants to alter. The current standard was articulated in TLI, Inc., 271 NLRB 798 (1984), and Laerco Transportation, 269 NLRB 324 (1984). There, the NLRB held that legally separate entities are joint employer only when they actually share the ability to control or co-determine the essential terms and conditions of employment (i.e., hiring, firing, discipline, supervision, and direction of employees). Plus, the putative joint employers’ control over these employment matters must be direct and immediate.

Browning-Ferris Industries of California, Inc., et al., arose in a union representation case. The Teamsters union sought to organize recycling sorters directly employed by a subcontractor, Leadpoint Business Services, but also asserted that Browning-Ferris Industries of California Inc. (BFI) was a joint employer with Leadpoint. The NLRB’s regional director applied the established standard and found that BFI did not exert sufficient control over Leadpoint’s workers,(e.g., BFI did not control pay or benefits, did not have authority to recruit, hire or fire, did not control the sorters, and gave them only routine instructions,) and noted that Leadpoint had its own human resources department. He concluded that Leadpoint was the sole employer and directed an election.  

The Teamsters appealed, stating, “This case presents an opportunity … to address how best to evaluate joint-employer status in this increasingly common setting: workplaces where employers use labor contractors or staffing agencies to supply workers.” Simultaneously, a union blog post announced that it would urge the NLRB “to overhaul its dated and toothless test of joint-employer status.” After granting the union’s request for review, the NLRB extended an invitation for interested parties to file amicus briefs addressing whether it should maintain the existing joint-employer standard or adopt a new one.

With President Obama’s appointees filling all five seats at the NLRB, the betting odds prohibitively favor a decision that will abandon the historic test for joint employers in favor of a test that sweeps most outsourcing arrangements into joint employment. It is expected that the NLRB’s ruling likely will make it easier for unions to organize ‘temp’ workers and to include bargaining units with the employees of the “joint employer.” This likely is just the first step in the Board’s initiative to modify the joint employer standard under the National Labor Relations Act, and to make it easier for unions to organize workers.

Since the NLRB has proposed shortening the time between when a representation petition is filed with the NLRB, and when a union election is held from an average of 38 days to as few as 10 days, and to require employers to quickly provide union organizers with extensive information about employees, the impact of Browning-Ferris Industries will be compounded. The risk of a new joint employer standard is highest for employers like BFI which have contractors working on its own premises. If your business model includes that feature, it is time to start thinking prophylactically.

Historical paradigms are changing. The model where each silo in the supply chain was responsible for its own employees and any employment law issues concerning those employees is gone. What can and should your business do? First, determine whether contractors can be moved offsite or eliminated. Second, include indemnification provisions that hold your contractors or suppliers responsible for any damages or liability suffered. Finally, investigate the reliability (to pay that indemnity) and credibility (as good corporate citizens who can be counted on to obey rather than flout laws) of those entities that you do business with.

Contributing Author

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Marilyn A. Pearson

Marilyn A. Pearson is a partner in the Chicago office of DLA Piper. Pearson advises and represents clients on a broad range of traditional labor...

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