In a hotly contested decision, the National Labor Relations Board (“NLRB”), in Browning-Ferris Industries of California, Inc., Case 32-RC-109684 (August 27, 2015), greatly expanded the definition of “joint employer” under the National Labor Relations Act (“NLRA”). Previously, two employers could be found to be joint employers if they each exercised actual control over the employees. Now, the NLRB has held that two employers are joint employers of the same employees if they “share or codetermine those matters governing the essential terms and conditions of employment.” Terms and conditions of employment include such things as wages, schedules, job duties, and break times. Under this decision, as long as one employer has the ability to make or influence decisions concerning the terms and conditions of employment, whether or not that employer exercises that ability, a joint employer relationship may be found.

When may a joint employer situation occur? Under the new standard, most temporary service arrangements run the risk of a finding of joint employer status, as do franchise arrangements. Other contracted services also may fall within this broad reach.

If joint employer status is found, both employers will be required to bargain with a union that represents employees. A joint employer also may be found liable for unfair labor practice charges brought against the other joint employer.

In the Browning-Ferris case, a temporary services company called Leadpoint supplied employees to Browning-Ferris, Inc. (“BFI”) to work on various material-handling lines at a recycling plant. It also supplied housekeeping employees. Leadpoint hired, fired and disciplined its workers. It set the pay rates for these employees. It had a supervisor on site to whom its employees reported. Leadpoint scheduled the workers as well.

BFI set the hours of operation for the plant. It required that the employees Leadpoint hired met BFI’s job qualifications, including test scores. It required that Leadpoint employees assigned to the site pass a drug test. The contract between BFI and Leadpoint required Leadpoint to use reasonable efforts not to hire for its site any employees BFI had already employed and deemed ineligible for rehire. The contract also required that Leadpoint not pay its employees more than the pay rate for BFI employees performing similar tasks, unless BFI gave permission to do so.

If BFI supervisors noted a problem with any Leadpoint workers, they mentioned the problem to the Leadpoint supervisor, who was responsible for handling the problem, including any discipline. On a few occasions, a BFI supervisor directed a Leadpoint worker to a position on the line.

BFI determined what lines would be working at any time, and provided Leadpoint with a target number of employees. BFI also determined the number of employees needed on any line. Leadpoint determined which specific employees would be assigned to which positions on the line.

New Leadpoint employees were trained by Leadpoint, but BFI occasionally would provide input into the training, such as explaining the process and the goals of the operation. The contract between BFI and Leadpoint required Leadpoint employees to comply with BFI’s safety policies, procedures, and training requirements.

After analyzing the work relationship in detail, the NLRB, under its new standard, determined that BFI and Leadpoint were joint employers of the sorters, screen cleaners, and housekeepers assigned to the BFI facility. This decision paves the way for a union election to determine whether these employees wish to be represented by the Teamsters.

What Does This Decision Mean For You? This decision may have a far-reaching impact, and may call into question various business arrangements on which many have relied. For example, franchise arrangements generally allow the franchisee the freedom to hire, discipline, pay and schedule its employees as it sees fit. If franchisors may be liable for unfair labor practices of their franchisees, however, they may take over more of the personnel decisions on a local level. Unions probably will attempt to unionize franchises on a national basis, requiring franchisees to sign on to a national collective bargaining agreement. Agreements with temporary agencies may not insulate companies from joint responsibility for the temporary workers. For example, here, Leadpoint even maintained its own on-site supervision of its temporary workforce, but that did not insulate BFI from being found to be a joint employer.

If you have any questions about this or any other employment or labor law issue, please contact S. Whitney Rahman at (717) 509-7237 or at swr@blakingerthomas.com.