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NLRB’s new ‘joint employer’ standard threatens business interests

published in McAfee & Taft EmployerLINC | September 28, 2016

By Tony Puckett

The National Labor Relations Board (NLRB) demonstrated intent to change the traditional employer-employee relationship to broaden unionization in the United States in a series of cases over the last year. In three cases, the NLRB has jettisoned long-standing case law recognizing that separate employers have separate workforces even when the employers work together at a common job site or in a common enterprise. The NLRB’s new rules on “joint employers” threatens to undermine a variety of industries that rely on temporary employees, as well as the franchise concept for business.

NLRB’s new rules open doors wider for unions

First, in Browning-Ferris Industries of California, Inc., the NLRB changed the joint employer standard under the National Labor Relations Act. Browning-Ferris utilized a staffing services company called Leadpoint to perform work at a recycling center. A Teamsters local was certified by the NLRB to represent employees employed both by Leadpoint and by Browning-Ferris. To make this finding, the NLRB relied on Browning-Ferris’s indirect control and reserved contractual authority over what the NLRB called essential terms and conditions of employment of the employees who worked for Leadpoint. The NLRB stated that if there is at least reserved authority over essential terms and conditions of employment – regardless of whether that authority is ever exercised – then meaningful collective bargaining could be had between employees and both employers. The NLRB also expanded the essential terms and conditions of employment from hiring, discharge, discipline, supervision and direction to include number of workers supplied, scheduling, overtime, assignment of work, and determining the manner and method of work performance.

Second, the NLRB ruled in Miller & Anderson, Inc. that it will permit a single bargaining unit to include employees who are solely employed by one employer along with other employees who are jointly employed by that employer and a staffing agency – without the consent or agreement of either the employer or the staffing agency. In this decision, the NLRB overturned existing precedent that required the consent of both employers to have a multi-employer bargaining relationship. The NLRB stated that it would consider whether the different workforces have a sufficient “community of interest” to be included in the same bargaining unit. However, this may not be a difficult standard to meet where employees of the staffing agency perform work that is similar in some respects to the employees of the other employer. If a single bargaining unit of staffing agency employees and employees of the other employer is certified by the NLRB, then both employers would be required to bargain with the union simultaneously.

Third, the NLRB held in Retro Environmental, Inc./Green JobWorks, LLC, that a construction company and a staffing agency could be joint employers even though there was no certainty the two companies would ever work together again on future projects. During the summer of 2015, Green JobWorks provided temporary employees to Retro for work on two school projects that were set to conclude by the end of August. Retro had no pending requests for additional employees from Green JobWorks after those projects ended. A Laborers’ union local filed a petition to represent employees jointly employed by Retro and Green JobWorks. The NLRB found the two companies were joint employers of the temporary employees supplied by Green JobWorks under the new joint employer standard the NLRB announced in Browning-Ferris. The NLRB ignored the fact that the two companies were ceasing work together when the projects ended. Instead, the NLRB characterized the evidence as lacking in proof that the two companies intended to discontinue their working relationship in the future. Therefore, the NLRB found that that a multi-employer bargaining unit of employees of the two companies could be recognized.

Workforces with temporary employees face heightened threat

These decisions show that the NLRB is bent on transforming labor relations through its new joint employer standard. An employer can no longer be assured that its employees are separate from a staffing agency’s employees simply because the two employers hire, pay, direct and discipline their employees separately. The NLRB recognized in Browning-Ferris that its new joint employer test would require a highly specific factual inquiry in every case in which a joint employment relationship is alleged. The reach of the new test permits the NLRB to examine complex business relationships and nearly every workforce in which temporary employees are provided by a staffing agency. The NLRB has its sight set next on expanding the new joint employer standard to franchise relationships also in a series of cases against McDonald’s and its franchisees.

The NLRB’s new standard dictates that employers review their agreements with staffing agencies to consider how to avoid a multi-employer bargaining relationship. Such review should include what rights of control are reserved to the business utilizing a staffing agency, as well as aspects of the work functions and assignments that could implicate a community of interest in the two groups of employees.