NLRB Decision Will Impact Staffing Agency Relationships

09/09/2015 / Phyllis Karasov

On August 27, 2015, the NLRB issued a long-awaited decision regarding Browning-Ferris Industries of California, Inc. (BFI). In this case the NLRB reversed a longstanding standard defining joint employer status. BFI contracted with Leadpoint to provide certain workers involved in its recycling operation and to clean its facility. Leadpoint recruited, interviewed, tested, selected and hired the employees who performed work for BFI. The agreement between BFI and Leadpoint included provisions which, among other things, required Leadpoint to ensure that its personnel had the appropriate qualifications, including certification and training to perform the general duties of the assigned position, and required Leadpoint to make reasonable efforts not to refer workers who were previously employed by BFI and were deemed ineligible for rehire. BFI had the right to reject any Leadpoint employee or to request the removal of any Leadpoint employee, and to approve all hours worked by Leadpoint employees. The agreement also prohibited Leadpoint from paying a wage rate which was higher than that paid to BFI employees performing similar work. All employees referred to BFI had to pass a drug test.
The NLRB held in a 3-2 decision that two or more entities are joint employers of a single workforce if they are both employers within the meaning of the common law, and if they share or co-determine those matters governing the essential terms and conditions of employment. Essential terms would include hiring, firing, discipline, supervision and direction and wages and hours. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB will consider, among other factors, whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary or whether it has reserved the authority to do so.
The NLRB stated that the previous joint employer standard has “failed to keep pace with changes in the workplace and economic circumstances.”
In finding that BFI was a joint employer with Leadpoint, the Board relied on direct and indirect control that BFI possessed over essential terms and conditions of employment of the employees furnished by Leadpoint to BFI, and BFI’s reserved authority to control such terms and conditions.
Implications for Employers
Agreements between franchisors and franchisees and between employers and staffing agencies should be reviewed to determine if the control granted to the franchisor and/or employer is such that it has indirect control over the essential terms and conditions of employment of the other entity’s employees. Users of staffing agencies should consider eliminating provisions in their agreements which give the user indirect control of the staffing agency’s employees.
It can be expected that BFI will appeal this decision.