By: Kristofor L. Hanson and John E. Murray

The National Labor Relations Board (“Board”) has expanded its joint employer test providing easier access to unions seeking to represent staffing agency temporary workers. The Board’s decision in Browning-Ferris Industries of California, 362 NLRB No. 186 (Aug. 27, 2015), will likely have far-reaching implications for businesses who have relationships with workers provided by staffing agencies whom they did not previously consider as their own employee.

The Browning-Ferris decision arose after the Teamsters sought to represent various temporary workers at a BFI recycling facility. At this facility, BFI had 60 employees who performed work outside the facility. Most of these employees were represented by the Teamsters. Approximately 240 individuals worked inside the facility. Most of these workers were temporary employees supplied by Leadpoint, a staffing agency. The Teamsters conducted a campaign to represent these temporary workers as employees of BFI. BFI claimed these workers were not their employees.

The Underlying Facts

BFI and Leadpoint had an agreement which designated Leadpoint as the sole employer of the temporary workers it supplied to BFI. Leadpoint and BFI shared responsibility for the temporary workers in a manner which is fairly common among employers who use temps. Leadpoint was responsible for hiring and supplying qualified workers, but BFI set the qualification standards and required a pre-employment drug screen. Both BFI and Leadpoint provided some training to the temporary workers. Leadpoint had the responsibility to discipline, evaluate and discharge these workers. However, BFI could discontinue the placement of a worker, and could recommend or request discipline. Leadpoint was responsible for paying employees and setting wage rates, so long as those rates did not exceed the rate BFI paid full-time employees for similar tasks. BFI set shift schedules, staffing levels, productivity standards and controlled the pace of work. Leadpoint assigned workers to particular shifts and jobs. BFI supervisors conducted pre-shift meetings for all employees. However, Leadpoint had three on-site mangers and three leads who supervised these workers. It also had an HR manager on-site. Despite their agreement, BFI actually exercised fairly little control over the Leadpoint workers.

The Board’s Ruling

The Board determined BFI’s “right to control the work of [these] employees and their terms of employment” was more important than BFI’s actual exercise of that control. The Board stated that it does not “require that this right be exercised, or that it be exercised in any particular manner” in order for BFI to be considered a joint employer. In other words, BFI was a joint employer of these workers because of the control it could exercise over them.

The Board’s decision departed from more than 30 years of Board decisions and federal case law which had held that the actual control exercised was more significant in determining joint employer status. Now an employer who exercises “indirect control,” “reserves authority” to exercise control, or “co-determines” terms and conditions of employment may well be a joint employer under the National Labor Relations Act. 

The Impact of the Board’s Decision

This decision will likely have a far-reaching impact for any employer who engages a staffing agency for temporary workers.

Increased Organizing. Particularly where it already represents an employer’s full-time workforce, unions presumably will begin to target temporary workers for representation campaigns. It will be challenging for employers to recognize and respond to these campaigns. However, the impact of this decision probably will not be limited to efforts to organize temporary workers. It will potentially reach into other areas, such as:

Franchisor-Franchisee relationships. Franchisees and franchisors historically have not been joint employers of the franchisee’s employees. However, the NLRB’s General Counsel currently is trying to hold McDonald’s liable as a joint employer for the unfair labor practices of its franchisees. Based on the Browning-Ferris decision, the degree of control McDonald’s could directly or indirectly exercise over these workers may determine its joint employer status. The Board, or unions, also may assert pressure on franchisors in an effort to organize the employees of their franchisees.

Secondary boycotts. The new joint employer standard may expand the number of employers union workers can lawfully picket.

Multi-party bargaining. If the Teamsters represent BFI’s temporary workers, situations could arise in which BFI and Leadpoint both need to be involved in collective bargaining. In addition, many employers use temporary workers supplied by more than one staffing agency. Each staffing agency may require a seat at the bargaining table. This decision also could cause employers to limit the number of staffing agencies they use.

At the present time, the full scope of this decision is difficult to assess. There will likely be further litigation related to the Browning-Ferris decision. The ensuing litigation may lead the current Board, or a future Board, to modify its application. Lindner & Marsack will be preparing a more detailed memorandum on these and other issues as they are addressed by the Board and by federal courts. If you have any immediate concerns about how this decision could affect your business, feel free to call or email Kris Hanson, John Murray, Jon Swain, Tom Mackenzie, or any other Lindner & Marsack attorney.