First NLRB Decisions Applying the Expanded Joint Employer Test Yield Mixed Results and Demonstrate Need for Employers to Scrutinize Staffing Relationships with Contractors
In late summer of 2015, the National Labor Relations Board (“Board” or “NLRB”) issued its Browning-Ferris Industries (“BFI”) decision adopting an expanded joint employer standard.[i] Under the Board’s new test,[ii] two or more employers are joint employers of the same employees if (1) they are “both employers [of a single workforce] within the meaning of the common law” and (2) they “share or codetermine those matters governing the [employees’] essential terms and conditions of employment.”[iii] In applying this test, the NLRB reversed thirty years of precedent by holding that it would no longer require a joint employer to both possess authority to control employees’ terms and conditions of employment and actually exercise such authority directly.[iv] Instead, the Board held that it would find joint employer status where the putative employer (i.e., the assumed employer) has the mere right to control “the means or manner of employees’ work and terms of employment” or actually exercises such control either directly or indirectly.[v]
The media and legal industries have characterized the BFI decision in dramatic fashion with headlines such as: “Controversial NLRB Ruling Could End Contract Employment as We Know It,”[vi] and “NLRB Blows Up Staffing Agency Model: Rewrites Joint Employer Test.”[vii] Much of the concern by management interests is warranted, and the decision has far-reaching implications for industries using contracted workers, as well as the franchise industry. Yet two recently-issued NLRB Regional Director decisions applying BFI provide meaningful insight into how the NLRB will apply joint employer cases and show how employers may minimize the possibility they may be considered a joint employer under the Act.
This article summaries and compares the facts of BFI and the two recent NLRB Regional Director decisions, Akima Global Services, LLC/Akal Security (“AGS”),[viii] and Green JobWorks, LLC.ACECO, LLC,[ix] and sets forth recommended steps to minimize the likelihood that an employer could be deemed a joint employer by the NLRB.
Summary of BFI Decision
In BFI, the Board found that a non-union recycling facility operator, BFI, shared joint employer liability with a staffing agency, Leadpoint, which provided BFI with labor. The two entities were parties to a temporary labor services agreement providing that Leadpoint was the sole employer of the personnel it supplied to BFI, and pursuant to that agreement Leadpoint recruited, interviewed, hired, trained, and disciplined its personnel.[x] The Board emphasized additional details relating to the relationship between BFI and Leadpoint: (1) in the labor services agreement BFI retained the right to require Leadpoint to “meet or exceed [BFI’]s own standard selection standards and tests,” required all applicants to undergo and pass drug tests, and prohibited the hiring of workers deemed by BFI to be ineligible for rehire;[xi] (2) the labor services agreement gave BFI the unqualified right to “discontinue the use of any personnel” assigned by Leadpoint;[xii] (3) BFI controlled the pace of work by setting the speed of material streams;[xiii] (4) BFI managers assigned tasks to be completed, specified where Leadpoint workers were positioned, and oversaw employees’ work performance;[xiv] and, (5) although Leadpoint determined pay rates and administered payroll and benefits, BFI prevented Leadpoint from paying employees more than BFI employees performing comparable work.[xv] In light of these facts, the Board found that BFI shared and codetermined the terms and conditions of employment of Leadpoint’s employees.[xvi]
Summary of AGS Decision
In AGS, a federal detention facility contracted with AGS to provide staff, including armed and unarmed detention officers, which in turn contracted with Akal Security, Inc. (“Akal”) to provide armed detention officers.[xvii] The armed and unarmed officers performed separate functions. A union petitioned an election of all detention officers, including the unarmed guards employed by AGS and armed guards employed by Akal.[xviii] The Regional Director for Region 3 of the NLRB found that AGS and Akal were joint employers but found that the unit the union sought to represent was a “multiemployer unit” under Oakwood Care Center, and therefore was an inappropriate unit unless all parties consented to bargain.[xix] AGS and Akal did not consent.[xx]
In finding AGS to be a joint employer of Akal’s employees, the Regional Director emphasized the following facts, among others: (1) the highest-ranking managers of AGS and Akal, respectively, consulted regularly with one another about work issues; (2) the employee handbook for all detention officers carried both the AGS and Akal logos, but was an AGS document that consistently referred to AGS only; (3) the subcontract between AGS and Akal provided that AGS must approve all overtime for Akal officers, could, in its sole discretion, remove an Akal officer from an assignment, and may direct Akal to remove an Akal officer entirely if AGS deemed him or her unfit for duty; (4) the subcontract provided that Akal personnel shall adhere to and be accountable to AGS employment policies, workplace procedures, disciplinary actions, and compensation plans; (5) on certain shifts only AGS supervisors were present, and thus provided all supervision to Akal and AGS officers; and (6) Akal officers were subject to the compensation plan as established by the prime contract.[xxi]
Summary of Green JobWorks Decision
The Regional Director for NLRB Region 5 found in Green JobWorks found that joint employer status did not exist between Green JobWorks (“GJW”) and ACECO, LLC (“ACECO”).[xxii] GJW is a staffing company that provides temporary asbestos abatement and demolition labor to construction companies.[xxiii] GJW recruits new employees, provides training, and maintains workplace policies and procedures.[xxiv] Facts relevant to the Regional Director’s findings are as follows: (1) clients are able to request particular employees, but GJW is not obligated to comply with the request;[xxv] (2) under the GJW /ADECO contract, GJW must provide lead workers at worksites, and the lead workers are tasked with documenting and tracking employee hours, determining breaks, and removing workers from the site, if necessary;[xxvi] (3) the GJW /ADECO contract also provides that GJW has exclusively recruiting, hiring, assigning, counseling, disciplining, and discharging requirements; (4) the GJW /ADECO contract provides that GJW is exclusively responsible for establishing and paying wages and exercising human resources supervision;[xxvii] (5) GJW supplied its employees with almost all of their safety equipment; and (6) ADECO did not have authority to transfer GJW employees. The Regional Director found that the union failed to prove ADECO was a joint employer of GJW employees.
Takeaway From Regional Director Decisions
Regional Director decisions are not binding in other cases, and the union has appealed the Green JobWorks decision. However, the Akima and Green JobWorks decision provide valuable insight into how the Board will apply its new joint employer status and what steps employers can take to avoid a joint employer finding. Specifically, these decisions show that the Board will scrutinize the terms of agreements and how the parties conduct themselves pursuant to the agreements, and that even reserved authority to affect the terms and conditions of employment of another entity’s employees is sufficient to result in joint employer status, even when such authority is not exercised. In light of the BFI, Akima, and Green JobWorks decision, we recommend employers take the following steps to minimize the possibility of a joint employer finding:
1. Carefully scrutinize staffing and service agreements with third parties. Employers should eliminate reservations of rights to affect employment conditions of others—for example, by setting a maximum wage amount, reserving the right to transfer or discharge workers, reserving the right to discipline, and reserving the right to direct where and how the employees work. If not eliminated, reserved rights should be narrow and specific.
2. Ensure that hiring, scheduling, discipline, discharge, and similar decisions are made solely by the company providing staffing services, not by the client entity. The company providing staffing services also should track its own employees’ hours. Ideally, the company providing staffing services should require a lead employee to be present on-site when the company’s employees are working to make such decisions.
3. Retain counsel to assist with minimizing a finding of joint employer status.
4. Continue to follow the Rocky Mountain Employer, as Campbell Litigation will provide further updates and guidance on the joint employer issue as additional decisions are issued and the Green JobWorkers appeal is decided.
[i] See Browning-Ferris Indus., 362 NLRB No. 186, slip op. at 15 (2015).
[ii] The Board paradoxically described its new joint employer test as the “traditional” joint employer test, because the Board is returning to a standard applied until 1984. See id. at slip op. 1, 15.
[iv] Id.at slip op. 16.
[v] Id. at 15–16, 18–20.
[vi] See Daniel Fisher, Controversial NLRB Ruling Could End Contract Employment As We Know It, Forbes (Aug. 27, 2015, 04:20 PM), http://www.forbes.com/sites/danielfisher/2015/08/27/nlrb-declares-browning-ferris-a-joint-employer-whos-next/
[vii] Todd Lebowitz, NLRB Blows Up Staffing Agency Model: Rewrites Joint-Employer Test, Employment Law Spotlight (Aug. 30, 2015), http://www.employmentlawspotlight.com/2015/08/nlrb-blows-up-staffing-agency-model-rewrites-joint-employer-test/
[viii] Akima Global Serv., LLC/Akal Security, Case 03-RC-161373 (Nov. 6, 2015).
[ix] Green JobWorks, LLC/ACECO, LLC, Case 05-RC-154596 (Oct. 21, 2015).
[x] Browning-Ferris Indus., at slip op. 3–5.
[xi] Id. at slip op. 18.
[xiii] Id. at slip op. 18–19.
[xvi] Id. at slip op. 20–21.
[xvii] Akima Global Serv., LLC, Case 03-RC-161373, at slip op. 1–2.
[xviii] Id. at slip op. 2.
[xix] Id. at sip op. 15 (applying H.S. Care L.L.C. d/b/a Oakwood Care Center, 343 NLRB 659 (2004)). The Board in Oakwood Care Center held that employees who are jointly employed by a supplier of contingent employees and by the user of those employees cannot be included in the same bargaining unit with employees who are solely employed by the user employer without the consent of both the user employer and the supplier employer. Id. The NLRB is currently reconsidering its Oakwood Care Center position.
[xx] AGS, at slip op. 15.
[xxi] Id. at slip op. 13.
[xxii] Green JobWorks, Case 05-RC-154596, at slip op. 16–17.
[xxiii] Id. at slip op. 3.
[xxv] Id. at slip op. 4.
[xxvi] Id. at slip op. 5.
[xxvii] Id. at slip op. 6.