Ferrara Fiorenza P.C.
 

Joint Employer Test Reversed Again

3/8/2018

Employers who contract with temp agencies – or otherwise subcontract for labor services in their operations – are once again facing the risk of union organization by temp/leased employees. In 2015, the National Labor Relations Board (“NLRB” or “Board”) issued a highly controversial ruling in Browning-Ferris Industries (BFI), 362 NLRB No. 186 (2015).  The BFIdecision held that even if a company does not actually engage in the “direct and immediate” control of temps (such as hiring, firing, disciplining, and/or supervising employees), it is still considered a “joint employer” with the temp agency.  As such, the company leasing the temps would be subject to union organization by those temporary workers.  Then, on December 14, 2017, the Board overruled the BFIcase reinstating the “decades-old … direct and immediate” control standard for determining joint employer status.  Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017).  Now, as of February 26, the Board vacated the Hy-Brand decision effectively reinstating the BFI analysis.

Ruling Vacated Due to Board Member Conflict of Interest

The ruling was vacated because the Board’s Inspector General reported  that NLRB Member William Emanuel should have recused himself from participating in the Hy-Brand decision. Mr. Emanuel’s former law firm represented one of the joint employers involved in the BFI case. According to the Board’s Inspector General, Hy-Brand was in essence a rehearing of BFI.  Since, technically BFI is still pending before the Board, the Inspector General reported that Mr. Emanuel should not have participated in deciding the case.

Remembering BFI Decision

As a consequence, employers should re-familiarize themselves with the BFI decision. BFI owned and operated a recycling facility. The essential part of its operation involved the sorting of recyclable materials into separate commodities that were sold to other businesses at the end of the recycling process. BFI employed approximately 60 workers, most of whom worked outside the facility, where they moved materials and prepared them to be sorted inside the facility.

The interior of the facility housed four conveyor belts, called material streams. Each stream carried a different category of materials into the facility. Approximately 240 workers provided by Leadpoint Business Services (a temp agency) stood on platforms beside the streams and sorted through the material as it passed.

BFI and Leadpoint’s relationship was governed by a temporary labor services agreement.  The agreement clearly stated that Leadpoint is the sole employerof the personnel it supplied and that nothing in the agreement should be read to create an employment relationship between BFI and Leadpoint’s personnel.

While most companies which contract with a temp agency have similar provisions in their agreements, both BFI and Leadpoint went far beyond the contract’s terms to maintain a clear separation between BFI’s and Leadpoint’s employees.  For example, BFI and Leadpoint employed separate supervisors and lead workers at the facility. In fact, Leadpoint employed an On-Site Manager, three shift supervisors, and seven line leads who worked with the Leadpoint sorters. BFI and Leadpoint also maintained separate human resource departments. Leadpoint even had an HR manager who operated in a trailer (marked with the Leadpoint logo) outside the facility to address its employees concerns.

BFI Ruling

Despite these efforts to keep the direction and control of temp employees separate, the NLRB still ruled that BFI and Leadpoint were joint employers of the 240 workers supplied by Leadpoint. And, as a consequence, the Teamsters were permitted to move forward with their efforts to organize those workers and, if successful, to bargain with both BFI and Leadpoint with respect to those workers’ terms and conditions of employment.

Specifically, the NLRB held that:

“…the facts demonstrate that it [BFI] shares or codetermines those matters governing the essential terms and conditions of employment for the Leadpoint employees. In many relevant respects, its right to control is indisputable. Moreover, it has exercised that control, both directly and indirectly.”

Capturing the far-reaching ramifications of this new standard, Board Members Johnson and Miscimarra noted in their dissent: “no bargaining table is big enough to seat all of the entities that will be potential joint employers under the majority’s new standards.”

Bottom Line

The bottom line for employers using temps or leased employees is that if you do actually direct and control the temp/leased employees’ work, or if you have the authority to do so, you will likely be considered a joint employer with the temp agency/leasing company, of those workers.  Until BFI is overruled (again), these workers can organize a union and require you to bargain with them.

It should be noted that the NLRB – which is supposed to have five members – currently has only four: two Democratic and two Republican appointees.  A Senate hearing for President Trump’s nominee for the vacant fifth seat, John Ring, is scheduled to take place on March 1.  Should Mr. Ring be appointed and should the issue of joint employer status come before the Board again, it is likely that there may be yet another reversal to the Board’s position on joint employers. 

We will keep an eye on this situation and report any significant developments.

 



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