The National Labor Relations Board is at it again. In yet another decision aimed at easing employees’ efforts to unionize, the Board has overturned decades of Board precedent and has greatly expanded the definition of “joint employer,” which may have serious consequences for many employers.
Here are the facts: Browning-Ferris Industries (BFI) operates a recycling facility. Staffing company Leadpoint Business Services provided workers to BFI to perform BFI’s in-house sorting and cleaning work. Leadpoint employed its own supervisors to oversee those workers, and Leadpoint was solely responsible for all disciplinary action relating to the workers. The contract between Leadpoint and BFI provided that Leadpoint would do all hiring for the positions, but BFI required that each new hire pass a drug and alcohol test, which was administered by Leadpoint. In addition, BFI reserved the right to reject any worker provided by Leadpoint. Leadpoint set the workers’ wages and paid those wages, but the wages could not be higher than the wages paid to full-time BFI employees performing similar work without BFI approval.
In 2014, the International Brotherhood of Teamsters (Union) filed a petition for a union election, seeking to unionize Leadpoint’s sorting and cleaning workers. The petition named both Leadpoint and BFI as the employers, which meant that, if a union was elected, both Leadpoint and BFI would be required to bargain with the union over the workers’ terms and conditions of employment. BFI objected to being named in the petition as employer, arguing that, according to established Board precedent, BFI could not be a joint employer of the workers because it did not exercise direct control over the workers or participate in determining the workers’ daily work.
Prior to this decision, in order for an organization to be considered a joint employer of a worker or group of workers, the organization had to actually exercise regular control over important aspects of the workers’ wages and working conditions. The NLRB, referencing the “current economic landscape,” decided to overrule that precedent and implement a standard closer to that which existed in the 1960s and 1970s. Specifically, the Board held that in order for an organization to be a joint employer, the organization must merely possess the authority to control employees’ terms and conditions of employment, either directly or indirectly. Thus, the Board held that even though BFI may not have actually exercised any direct control over Leadpoint’s employees, BFI had the authority to do so, and therefore was a joint employer.
This ruling means that employers that contract with temporary agencies could be required to bargain with unions that represent their temporary workers. It also means that they could be held liable for unfair labor practices committed by a temporary agency or other joint employer. Employers that use temporary workers from staffing agencies should review their contracts with those agencies to determine whether the contracts include any indemnification language or language regarding the employer’s authority to exercise control over the staffing agency’s workers. Some employers may prefer to bring temporary employees in house to help reduce the likelihood of liability for acts committed by a staffing agency over which the employer may have limited control. In short, employers need to be aware of the risks of potential joint employer relationships and should take immediate steps to reduce those risks where possible.