United States: NLRB Greatly Expands "Joint Employer" Doctrine

As we previously reported on Aug. 27 and 28 (on our blog Labor Relations Today), the National Labor Relations Board (NLRB) recently issued its ruling in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015), that significantly alters the NLRB's existing joint employer standard. In a 3-2 decision, the NLRB overruled its prior joint-employer standard and approved a far more expansive view of joint employment. Although the full ramifications of the NLRB's decision remain to be seen, Browning-Ferris substantially increases the likelihood that certain companies (e.g., users of temporary staffing agencies and franchisors) will be deemed joint employers for National Labor Relations Act (NLRA) purposes.

Browning-Ferris arose out of a fairly typical user-temporary staffing agency relationship. Browning Ferris Industries of California, Inc. (BFI), operated a recycling facility that received and sorted for resale various mixed materials. BFI employed approximately 60 employees, who worked mostly outside the facility, moving and preparing material to be sorted inside the facility. Additionally, BFI had a temporary labor services agreement with a staffing agency, Leadpoint Business Services (Leadpoint). Leadpoint provided BFI with approximately 240 workers, who worked inside the BFI facility, either sorting materials or providing cleaning services.

Teamsters Local 350 sought to represent the 240 Leadpoint employees and to force BFI to be at the bargaining table as the "joint employer" of these employees. The regional director, applying the NLRB's traditional joint employer standard, concluded that BFI was not a joint employer with Leadpoint because it did not exercise direct control over the terms and conditions of Leadpoint's employees. After the union filed a request for review of the regional director's decision, the NLRB invited briefing as to whether it should reconsider its standard for evaluating joint employment relationships.

Through a three-person majority, the NLRB overruled the regional director. The majority adopted a new, more expansive joint employer standard and concluded that, under this standard, BFI was a joint employer of Leadpoint's employees. In doing so, the NLRB laid out in detail the relationship between BFI and Leadpoint and both entities' practices related to hiring, discipline and termination, wages and benefits, scheduling and hours, works assignments, and training and safety. Notably, much of what the NLRB majority described did not suggest a traditional joint employer relationship:

  • BFI and Leadpoint employed separate supervisors and lead workers at the facility.
  • BFI and Leadpoint maintained separate human resources departments.
  • Leadpoint recruited, interviewed, tested, selected and hired the employees it assigned to BFI's facility, and BFI's managers testified that they had no input into Leadpoint's hiring decisions.
  • Leadpoint maintained the sole responsibility to counsel, discipline, review, evaluate and terminate workers assigned to BFI, and the record showed only two instances of BFI prompting the discipline of a Leadpoint employee (one for passing a "pint of whiskey" at the job site and another for destroying a drop box).
  • Leadpoint solely determined the pay rate of its employees, subject only to a "cap" equal to the pay rate of BFI employees who performed similar tasks.
  • Leadpoint was responsible for providing specific employees to cover specific shifts at the facility.
  • Leadpoint employees submitted their timesheets directly to Leadpoint.
  • Leadpoint issued its employees their paychecks, maintained their payroll records, and was the exclusive provider of their employment benefits.
  • BFI managers set productivity standards for material sorting but only occasionally addressed Leadpoint employees directly as to their job tasks and quality issues.
  • Leadpoint employees received initial orientation and training from Leadpoint and only periodic training and counseling from BFI.

Nevertheless, the NLRB concluded that BFI was the joint employer of Leadpoint's employees. Addressing what it called the "evolution" of the joint employment standard, the NLRB concluded that the standard had been "effectively narrowed" without reason over the last several decades. Specifically, the NLRB reasoned that prior decisions focused too much on the actual exercise of direct and immediate control, as opposed to the mere "right" to control. The NLRB then announced its new standard:

The Board may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating the allocation and exercise of control in the workplace, we will consider the various ways in which joint employers may "share" control over terms and conditions of employment or "codetermine" them, as the Board and the courts have done in the past.

The NLRB reviewed the relationship between BFI and Leadpoint under the new standard and found that, although BFI rarely exercised authority over Leadpoint's employees, it "shared control over or codetermined" the terms and conditions of their employment. In particular, the NLRB noted the following:

  • Although BFI did not participate in Leadpoint's day-to-day hiring process, it retained the right to require that Leadpoint meet or exceed its own standard employee selection procedures and tests.
  • Although Leadpoint was solely responsible for disciplining its employees, BFI prompted discipline on two occasions.
  • Although Leadpoint was responsible for staffing shifts at the facility, BFI set the facility's operating hours and productivity standards.
  • Although Leadpoint established the pay rates for its employees, BFI placed a "cap" on such pay rates.
  • Although most communications to Leadpoint employees came from Leadpoint supervisors, Leadpoint supervisors acted only as middlemen for BFI.
  • Although Leadpoint issued its employees paychecks and maintained their payroll records, BFI had to sign off on Leadpoint employees' weekly timesheets and could refuse payment to Leadpoint for time claimed by a Leadpoint employee.

The NLRB majority did not specify which facts it found controlling or determinative in its analysis. Rather, it admittedly embraced a vague totality-of-the-circumstances approach, which the dissent described as "[we] will know it when [we] want[] to see it." Indeed, the majority acknowledged that its decision eliminates "certainty and predictability regarding the identity of the 'employer'" in favor of an "evolutionary process." Unless and until the NLRB clarifies its new joint employer standard, employers have only the specific facts in Browning-Ferris as their guidepost in analyzing whether they could face exposure as joint employers under the NLRA.

As noted in the blistering dissent and discussed in detail here, Browning-Ferris will have far-reaching consequences. The NLRB's decision 1) threatens traditional user-staffing agency, franchisor-franchisee, and parent-subsidiary relationships; 2) limits companies' ability to replace unionized contracts; 3) exposes more companies to secondary economic coercion (e.g., picketing); and 4) potentially leads to a variety of unstable bargaining relationships. Accordingly, companies (especially those that use staffing agencies and franchisors) should evaluate their contractual relationships to determine whether they may be joint employers under Browning-Ferris and continue to monitor developments from the NLRB closely.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions