NLRB Expands The Joint-Employer Standard

GILLIAN G. LINDSAY

Associate

“Following the NLRB’s decision... it will be difficult for companies to use temporary workers without being considered joint employers with the staffing agencies.”

“As a result of this decision, many employers are concerned about the possibility that temporary workers will attempt to unionize, creating additional expense and challenges for both the temporary staffing agency and the client company.”

EMPLOYMENT UPDATE
NLRB Expands The Joint-Employer Standard

BY GILLIAN G. LINDSAY

The contingent workforce in the United States has grown significantly; as of August 2014, 2.87 million temporary workers made up nearly 2 percent of the United States’ workforce. To keep pace with the dramatic increase in contingent work, the National Labor Relations Board (“NLRB”) expanded the jointemployment standard under the National Labor Relations Act (“NLRA”).

Following the NLRB’s decision in Browning-Ferris Industries of California, Inc., d/b/a BFI Newby Island Recyclery, Case No. 32-RC-109684, it will be difficult for companies to use temporary workers without being considered joint employers with the staffing agencies. Under the new standard, the right to control—even if never exercised—is sufficient to establish a joint-employment relationship.

In the Browning-Ferris case, the client company took precautions to maintain separateness from the temporary workers. The client service agreement required the staffing agency to provide onsite supervisors and HR support. The agreement also stated that the staffing agency was the sole employer and that nothing in the agreement could be construed as creating an employment relationship between the client and the temporary workers.

Despite these efforts to maintain separateness, the NLRB found a joint-employer relationship. In reaching its decision, the NLRB pointed to the following factors:

Facts Favoring A Single Employer:

  • Client and staffing agency employ separate on-site supervisors and lead workers who oversee their own employees.

  • Client and staffing agency maintain separate HR departments.

  • Staffing agency recruits, interviews, tests, selects, and hires its own personnel who are then assigned to client.

  • Staffing agency maintains sole responsibility to counsel, discipline, review, evaluate and terminate workers assigned to client.

  • Staffing agency issues paychecks and benefits to its workers.

  • Staffing agency provides specific employees to cover regularly scheduled and overtime shifts.

  • Staffing agency provides orientation and training for its employees.

  • According to the client service agreement, staffing agency workers shall not be assigned to client for more than six months.

    Facts Favoring Joint-Employers:

  • The client service agreement provides that workers will meet client’s standards, workers will meet or exceed client’s selection process and tests, staffing agency will not refer employees who client deems ineligible for rehire, and staffing agency employees must pass a drug screening test.

  • Client retained authority to reject any personnel and discontinue the use of personnel for any or no reason.

  • Client prompted staffing agency to discipline workers on two separate occasions.

  • Client mandates that staffing agency may not pay its employees more than client employees who hold similar positions.

  • Client sets facility schedules.

  • Client representatives must sign off on employees’ timesheets; Client may refuse payment for any employee who fails to obtain a Client signature.

  • Client determines the speed of the material streams.

  • Client sets a target headcount.

  • Client sets productivity standards.

  • Client sets the number of workers assigned to each stream.

  • Client managers identify productivity issues and communicate their concerns to staffing agency supervisors.

  • Staffing agency employees must comply with Client’s safety policies, procedures, and training.

  • Client never invoked the provision that limits employee terms to six months.

  • Client may request to inspect staffing agency personnel files at any time.

After analyzing the above factors, the NLRB applied its new rule that two or more entities are joint employers if they share or codetermine the matters governing the essential terms and conditions of employment. The NLRB no longer requires that this control be direct or immediate; instead, the board will consider whether the entity that uses temporary workers has control over the employees’ work and terms of employment—even if that control is indirect and never exercised.

As a result of this decision, many employers are concerned about the possibility that temporary workers will attempt to unionize, creating additional expense and challenges for temporary staffing agencies and their clients. In spite of this change, however, temporary staffing agencies will likely remain a good business model for many companies. The NLRB’s decision does not reduce the advantages of outsourcing human resource responsibilities, lowering unemployment and workers compensation expenses, and externalizing tax withholding and other costs associated with a traditional employment relationship.

Contact Gillian Lindsay, (312)696.1365, or gglindsay@golanchristie.com to discuss how the Joint-Employer Standard relates to your business.