In a highly anticipated decision, the NLRB has restated and redefined the standard for determining when employers will be found to be joint employers for purposes of the National Labor Relations Act (“NLRA”). The NLRA governs labor management relations in the private sector. This three-to-two decision applies long-established principles to find that two or more entities are joint employers of a single workforce if: (1) they are both employers within the meaning of the common law; and (2) they share or codetermine those matters governing the essential terms and conditions of employment. This decision has wide ranging impact on any private employer that uses temporary contingent workers provided by third parties.
Workers Supplied Under a Temporary Labor Services Agreement Are Jointly Employed
The case arose in the context of a union election petition filed by a union seeking to represent employees of Leadpoint Business Services (“Leadpoint”) that provided workers to Browning-Ferris Industries (“BFI”) to operate its internal waste recovery operations. BFI directly employed about 60 employees while Leadpoint directly employed about 240 employees that it provided to BFI by a “Temporary Labor Services Agreement.” Initially, the NLRB Regional Director ruled that Leadpoint was the sole employer of its employees and that BFI did not share or codetermine essential terms and conditions of employment. An election was conducted in April 2014 and the ballots were impounded while the union sought review urging the NLRB to rule that BFI and Leadpoint are joint employers. The NLRB’s decision orders the ballots to be counted. If the union wins a majority, then BFI and Leadpoint will have an obligation to bargain over the wages, hours and working conditions of Leadpoint’s employees. It could become quite complicated sitting around that bargaining table.
The NLRB’s Decision Breaks with 30 Years of Precedent
Since 1984, the NLRB had held that in order for two or more employers to be joint employers they must not only possess the authority to control but also must exercise that authority over employees’ wages, hours and working conditions. Now, in evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment but also exercise that authority. Rather, an employer retaining reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry. The NLRB will – among other factors — consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary or whether it has reserved the authority to do so. The NLRB ultimately concluded its opinion stating, “It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace. Such an approach has no basis in the Act or in federal labor policy.”
The Determination Will Depend on All the Facts
In this 50-page decision, the NLRB lists a multitude of facts that it found supported its conclusion that BFI reserved sufficient authority to be a joint employer along with Leadpoint. The problem as the two dissenting members point out is that employers will never be able to know if they are or they are not joint employers. The majority countered that even under the previous standard, each case had to be determined based on its own unique facts and circumstances. Nevertheless, the NLRB made its determination of joint employer status analyzing the following factors:
- Management Structure
- Hiring
- Discipline and Termination
- Scheduling and Hours
- Wages and Benefits
- Work Processes
- Training and Safety
- Length and Terms of the “Agreement”
Heads-Up for Employers
Needless to say that most temporary labor services agreements reserve to the user employer certain rights and authorities over who is assigned to work for them by the supplier employer. Those agreements also likely contain a requirement that those workers abide by the user’s rules while in the user’s premises. The NLRB’s decision suggests that virtually all such arrangements reserve sufficient authority to make the relationship a joint employment relationship. Employers that have such arrangements should review those arrangements to determine just how much authority is reserved.
If you have any questions, please contact Steve Lyman at slyman@wp.hallrender.com or your regular Hall Render attorney.
