NLRB Expands Reach by Altering Joint-Employer Standard

Recently, in Browning-Ferris Indus. of Cal., the National Labor Relations Board continued to expand its reach and once again altered decades old law in favor of labor unions, this time by making it easier for unions to hold multiple businesses responsible for bargaining with a single group of workers over employment conditions and terms. The decision has potentially far-reaching implications for companies that enter into staffing arrangements with third parties, including franchisors, who now may have legal obligations to bargain with unions where they never before did.

Under the new standard, a company can be deemed a statutory employer if it possesses (even if it does not actually exercise) sufficient control over essential employment conditions and terms. Accordingly, a business may be a joint employer if it reserves the right to control employment conditions and terms in an employment arrangement or if it indirectly controls such conditions and terms through its influence over another business. The Board claimed that the new standard was necessary to protect the NLRA’s policy of encouraging collective bargaining due to an uptick in contingent employment arrangements throughout the country.

New Standard in Action

Applying the new standard in Browning-Ferris, the NLRB decided that a recycling company and its labor supplier were joint employers. In rendering its decision, the Board examined both the temporary labor services agreement between the two businesses and the employment relationship.

As far as hiring, disciplining, and firing, the NLRB acknowledged that the labor supplier made those decisions, but discounted the labor supplier’s independence because it had to follow hiring standards set by the recycling company, the recycling company expressly reserved the right to terminate any worker in the temporary services agreement, and, on two occasions, the labor supplier discharged workers shortly after the recycling company complained about them. Concerning compensation, the Board recognized that the labor supplier paid the workers and provided them benefits, but emphasized that the recycling company placed a limit on pay and reimbursed the labor supplier for the wages. Regarding operations, the NLRB acknowledged that the labor supplier decided which individual workers would perform which duties (most workers sorted through materials on conveyor belts), but stressed that it was the recycling company that decided what tasks needed to be completed each day, the number of workers needed, the work schedule, when overtime was necessary, where workers should be positioned on the conveyor belts, and the speed at which the conveyor belts would run.

Using the new standard, the Board concluded that the recycling company and the labor supplier were joint employers because the recycling company not only possessed sufficient control over essential employment conditions and terms, but occasionally exercised, both directly and indirectly, such control. Notably, the NLRB highlighted that the workers at issue in the case would only be able to meaningfully bargain over certain subjects, like break times, overtime, safety, and the speed of the conveyor belts, if the recycling company were a joint employer because the recycling company had exclusive control over these subjects.

It is likely that the recycling company in Browning-Ferris will appeal the decision to a federal appellate court. We will, of course, keep our readers advised of future developments.

In the meantime, you should feel free to contact an attorney in the Gibbons Employment & Labor Law Department with questions about this blog or about collective bargaining issues generally.

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