Labor Board’s joint employer decision sure to cause headaches

published in McAfee & Taft EmployerLINC | August 31, 2015

By Charles S. Plumb

Currently, only seven percent of Americans employed by private employers are union members, so it’s no surprise that unions are struggling and desperate to grow membership.

The National Labor Relations Board, which enforces labor laws for both unionized and non-unionized employers, recently issued a ruling on joint employer status for companies using temporary workers through staffing agencies that could have a far-reaching effect on attempts by unions to organize more employers. Right now, nearly three million U.S. workers are employed through temporary agencies.

Let’s look at the Labor Board’s decision and discuss its potential impact.

Browning-Ferris Industries operated a recycling facility at the Newby Island plant in Santa Clara County, California, that received and processed recyclables. Sorting recyclables by type and commodity was one of the principal operations at the Newby Island plant. Leadpoint Business Services was a staffing agency. Under its temporary labor services agreement with Browning-Ferris, Leadpoint provided approximately 240 sorters, cleaners and housekeepers to the Newby Island facility.

The agreement between the two companies stated Leadpoint was the sole employer of the workers it supplied Browning-Ferris for the recycling operation. For personnel assigned by Leadpoint to the Newby Island facility, the agreement specified that Leadpoint was responsible for:

  • Providing supervision;
  • Recruiting, interviewing, testing, selecting and hiring;
  • Evaluating, disciplining and terminating;
  • Determining pay rates;
  • Scheduling which employees worked each shift; and
  • Conducting orientation and training

Nevertheless, the Labor Board found that Browning-Ferris was a joint employer for the workers Leadpoint assigned to the recycling operation. According to the Labor Board, Browning-Ferris exercised “indirect and direct control” over Leadpoint workers and reserved the right to override Leadpoint’s authority on oversight, selection, discipline and scheduling.

The Labor Board’s ruling for the Newby Island operation is a radical change from prior law. Its potential effects may be felt by not only companies that use temporary employees, but also franchisors or franchisees. Being treated as a joint employer may cause a company to become a more attractive target for union organizing efforts. Similarly, an organization found to be a joint employer may unwittingly find itself subject to joint obligations and joint liability for workers it may have little or no actual control over.

The full extent of this seismic decision remains to be seen, but there is no question the legal landscape for employers has experienced a significant shift.

  • Browning-Ferris Industries of California, Inc. v. Sanitary Truck Drivers and Helpers Local 350, 32-RC-109684 (NLRB 8/27/15)