ANOTHER NLRB RULING TILTS THE PLAYING FIELD AGAINST EMPLOYERS
On August 27, 2015, the National Labor Relations Board released its opinion in the case of Browning-Ferris Industries of California, Inc. and Sanitary Truck Drivers and Helpers, Local 350, International Brotherhood of Teamsters, Case 32-RC-109684. Browning-Ferris Industries (BFI) operated a recycling facility. Another employer, Leadpoint Business Services (Leadpoint), provided workers who sorted recyclable materials inside the facility. The relationship between BFI and Leadpoint is governed by a Temporary Labor Services Agreement. The question in the case was whether or not BFI and Leadpoint are joint employers. The answer was, “yes.”
Prior to this case, the test utilized by the Board to determine whether a joint employer relationship exists was whether an employer actually exercised control that was direct and immediate, and not “limited and routine.” The Board generally has found control to be “limited and routine” where instructions consist primarily of telling employees what work to perform, or where and when to perform the work, but not how to perform the work.
The standard has now changed. According to the Board, the question is not whether an employer actually exerts control. Rather, the right to control can also determine the existence of an employment relationship. Moreover, there is no longer any requirement that control be “direct and immediate.” The Board stated the new standard as follows:
The Board may find that two or more entities are joint employers of a single work force. . . if they share or determine those matters governing the essential terms and conditions of employment…
Essential terms in dispute will include wages and hours, as reflected in the Act itself. Other examples of control over mandatory terms and conditions of employment found probative by the Board include dictating the number of workers to be supplied; controlling scheduling, seniority, and overtime; and assigning work and determining the manner and method of work performance.
The Board added:
[W]e will no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also must exercise that authority, and do so directly and immediately. . . The right to control, in the common law sense, is probative of joint employer status, as is the actual exercise of control, whether direct or indirect.
So what does all of this mean? In practical terms, it means that the Board can look for indicators that one employer has the right to determine the terms and conditions governing another employer’s employees. Examples where this will be problematic immediately come to mind:
- At a typical construction site, a general contractor very likely will determine safety practices, and may determine hours of access and other essential terms which govern employees’ work, regardless of which subcontractor employees may be employed by.
- A franchisor may either control or have the right to control franchisees’ employee uniform policy, employee training, safety standards, equipment to be used on the premises, etc.
The intent of this decision is to broaden the scope of collective bargaining. It appears that this decision will accomplish that goal if it is not successfully challenged in the courts. In terms of practical advice, the best policy may be to think long and hard about whether it is absolutely essential to enter into a relationship with a contractor, franchisee, temporary agency, or other entity that will give rise to a joint employer relationship. In cases where relationships are essential, careful scrutiny will be necessary not only with regard to any written agreements, but also with regard to how supervision and control is actually applied.
The bottom line is that if this decision is not successfully challenged, it is likely that even the most careful employers will find it difficult to avoid a finding of joint employer status if their operations are dependent upon close coordination with other employers.