On August 27, 2015, in a highly anticipated and controversial decision, the National Labor Relations Board announced its standard for determining whether companies that utilize contract labor are “joint employers” with the duty to negotiate with their contract workers’ labor unions.

The contractor, Browning-Ferris Industries of California (BFI), partially staffed its recycling plants with workers provided under a contract with Leadpoint Business Services, a labor services supplier. BFI’s contract with Leadpoint expressly provides that “Leadpoint is the sole employer of the personnel it supplies, and that nothing in the Agreement shall be construed as creating an employment relationship between BFI and the personnel that Leadpoint supplies.” However, the NLRB nonetheless concluded that BFI was a joint employer of the Leadpoint personnel, and was therefore obligated to protect the’ collective bargaining rights of those employees.

In reaching its conclusion, the NLRB expressly rejected the argument that joint employers must “not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority’ in a direct and immediate manner.” Under the NLRB’s standard, the indirect exercise of control—such as through an intermediary—is sufficient to establish a joint employment relationship, and even the mere authority to control the terms and conditions of employment, without any exercise of control whatsoever, may  be enough to create the joint employment relationship.

What It Means for Employers

Companies that are a step removed from employees, such those who utilize workers provided by labor contractors, franchisors, or professional employer organizations, are at greater risk of being classified as joint employers under the NLRB’s more inclusive standard. If so classified, these companies will be deemed responsible for ensuring that the direct employer does not violate or infringe on its employees’ rights to organize under the National Labor Relations Act. They will also be required to engage directly with such employees in union negotiations and collective bargaining.

Employers who wish to minimize the risk of being found to be a “joint employer” should carefully review any potential contracts that involve contract labor, and also strictly avoid exercising direct authority over the terms and conditions of employment of those workers.

Read the NLRB’s decision here.

The joint employer issue will be one of the topics discussed during SHLC’s December 2, 2015 webinar with special guest speaker Valerie Hardy-Mahoney, NLRB Regional Attorney.  To enroll in the webinar go to https://suttonhague.com/Events or contact any SHLC office.