In late August the National Labor Relations Board (NLRB) made a decision (Browning-Ferris Industries of California, Inc., et al. v. Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters) that might make you think twice about outsourcing your next project. Through this decision the NLRB pronounced a new legal standard to determine if a business is a joint employer of another’s employees. They’ve also created a fair amount of confusion and uncertainty in the process. Under this new standard, employers may now have obligations and liabilities under federal labor law in relation to the employees of a variety of other companies with which they do business – their contractors, suppliers and franchisees just to name a few.
The decision says that two or more companies are joint employers if they share the ability to govern terms and conditions of employment. If you set some of the terms or conditions of employment for temporary staff, your contractor’s staff or an employee of an outside agency, the NLRB might consider you to be a joint employer. That not only means that you could be held liable for labor violations but, since this decision makes it easier for labor unions to organize employees of staffing agencies and franchises, it also means that you could be forced into collective bargaining negotiations. Employers using staffing agencies are particularly at risk. If you have sufficient authority to control things like wages and working conditions, you may be considered a worker’s employer, even if another company also qualifies as an employer of that same worker.
Not convinced that this applies to you? Consider this: If you have the ability to reject temporary workers, establish qualifications or assign work shifts for temporary employees or the employees of a contractor, then it is very possible you could be considered a joint employer. If you require these workers to follow your company’s safety procedures and go through your company’s training, you could be considered a joint employer. If your supervisors provide oversight for these workers, you could be considered a joint employer.
For more than 30 years the NLRB considered a company a joint employer only if it had direct control over working conditions and chose to exercise that control. Now a company may be deemed a joint employer if it has indirect control or simply reserves the right to have such control. So even if a company has the right to control working conditions but chooses not to use it, they can still be liable for the negative impact of other joint employers of that worker.
Now is the time to consider your current employment practices in order to avoid unintentional joint employer status. While the NLRB’s decision provides little detail that will enable you to guarantee you are not a joint employer, you should review franchise agreements, staffing agency contracts, etc. in an effort to mitigate this risk.
It is important to note that the recent decision has no impact on laws over which the NLRB has no jurisdiction. For example, this does not change the definition of who is an employee for tax or benefits purposes.