NLRB Re-Defines Joint Employer Standard - Altering Many Business Relationships
September 9, 2015
Recently, the National Labor Relations Board handed down a much anticipated ruling in Browning-Ferris Industries of California (BFI), a case that tested the decades?old and commonly accepted joint employer standard to determine whether two otherwise separate entities are considered one joint employer for collective bargaining purposes (and possibly other purposes). The Board ruled that Leadpoint Business Services, an independent staffing services contractor that supplied employees to BFI, is considered a joint employer with BFI for purposes of their collective employees’ petitioned?for bargaining unit.
As a general rule, two or more employers are considered joint employers of the same employees if they share or codetermine those matters governing the essential terms and conditions of employment. To make this determination, the Board considers whether an employer has control over hiring, firing, discipline, supervision and direction, wages and hours, the number of workers to be supplied, scheduling, seniority, and the manner and method of work performance. Under prior case law, a required factor was whether a joint employer actually exercised direct control over the workers. In this case, however, the Board found joint employment by relying primarily on indirect control that BFI possessed over the essential terms and conditions of employment, as well as its reserved authority to control those terms and conditions.
According to the contract, Leadpoint was to recruit, interview, test, select, and hire personnel to perform work for BFI. Leadpoint fired and disciplined its workers, employed separate supervisors and lead workers in the recycling plant, and only Leadpoint employees worked for Leadpoint supervisors. The agreement ensured both companies had their own human resource departments that determined an employee’s pay, hours, scheduling, seniority and what tasks that employee would perform in the BFI plant.
The Board noted, however, BFI’s agreement also required that Leadpoint’s employees meet or exceed BFI’s own standards, that the employees be paid by BFI’s suggested rate schedule which could change solely at BFI’s approval, and that Leadpoint employees could not be paid more than BFI’s employees. Further, BFI established the schedule of working hours, BFI required Leadpoint to make reasonable efforts to not employ anyone previously employed by BFI, and BFI had ultimate authority to reject any Leadpoint personnel for any or no reason. BFI also prohibited Leadpoint employees from working for more than six consecutive months, and BFI’s managers set productivity standards. Based on this contract language, the Board found that BFI constructively controlled many terms of employment of the Leadpoint employees working at BFI’s facility, and that BFI maintained the ultimate indicia of the terms and conditions of all people working at its facility.
The Board then revised the standard for assessing joint employer status by eliminating the requirement that an employer must actually exercise direct and immediate control over the workers. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will now consider whether an employer has exercised control over the terms and conditions of employment directly, indirectly or through an intermediary, or whether it has reserved the authority to do so.
The immediate implication of this case is to expand the number of potential workers who may be included in a collective bargaining unit for organizing purposes. However, this case uses broad strokes to paint a new picture of the joint employer standard, and it may eventually be used as a tool for leased employees and employees of franchisees to support unfair labor practice charges against multiple joint employers. Businesses which contract with staffing companies to provide leased employees and franchisors which have multiple franchise locations should take a hard look at their outsourcing agreements and employee policies and consider how the new joint employer standard will apply to them.
This article was authored byHeather E. Joyce and Keith A. Sermersheim, Jackson Kelly PLLC.