May 21, 2014
LABOR LAW UPDATE
Continuing to show its willingness to overturn established precedent, on May 12, 2014 the National Labor Relations Board (NLRB) issued a Notice And Invitation To File Briefs (Notice) inviting parties and amici to provide input on “substantial issues” raised by the union in a case pending before the Board. In particular, the NLRB asks:
“Should the Board adhere to its existing joint-employer standard or adopt a new
standard? What considerations should influence the Board’s decision in this regard?”
If the NLRB adopts a standard that is more expansive than the existing one, any employer (union or non-union) that contracts with a separate employer for workers may see an increase in representation petitions from unions seeking to force the primary employer to bargain with the contracted employees’ union. In this Alert we discuss the current standard, the case pending before the Board, and practical considerations for employers.
The “joint employer” standard is a method for determining whether two independent entities both employ an individual. The existing joint employer standard requires a showing that the alleged joint employer “meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction.” See TlI, Inc., 271 NLRB 798 (1984); Laerco Transportation, 269 NLRB 324 (1984). (Note: The “joint employer” standard is different than the “single employer” doctrine, which addresses the question whether two entities should be considered as one for a specific purpose.
The Pending Board Case
The NLRB issued the Notice calling for input on the joint employer standard in a pending case known as Browning-Ferris Industries (Case 32-RC-109684). In that case, Browning-Ferris Industries of California (BFI) contracted with a separate employer for workers to perform duties at a Milpitas, California recycling facility it owns and operates. BFI employs approximately 60 individuals at the facility, most of whom are equipment operators who move materials around the exterior of the facility. BFI contracts with Leadpoint Business Services, Inc. (Leadpoint) to provide 240 workers for sorter, screen cleaner, and housekeeper positions. The temporary services agreement between BFI and Leadpoint expressly provides that Leadpoint is the sole employer of the 240 contracted employees and is solely responsible for their recruitment, hiring, discipline, termination, wages, benefits, and day-to-day supervision. Teamsters Local 350, which currently represents BFI’s employees at the recycling facility, started the proceedings at issue by filing a petition seeking to represent Leadpoint’s employees that work at the facility. In the petition the Teamsters identified both BFI and Leadpoint as the employer in the matter. BFI and Leadpoint challenged the petition on the grounds that only Leadpoint employs the 240 subcontractors and only Leadpoint should be required to bargain with the Teamsters over the terms and conditions of its employees’ employment. The NLRB Regional Director conducted a fact-intensive analysis and determined that BFI and Leadpoint are not joint employers.
The Teamsters disagreed, and petitioned the NLRB for review of the Regional Director’s decision. The Teamsters argue that the Board’s current joint employer standard is flawed because it allows companies like BFI to insert a contractor between itself and its employees, thus insulating itself from its legal obligation to recognize and bargain with the employees’ representative. The NLRB granted the Teamsters’ request for review, and issued the Notice mentioned above seeking input on whether or not to change its standard.
If the Board finds that the Regional Director erred in his ruling and determines that BFI and
Leadpoint are in fact joint employers, both BFI and Leadpoint would have to bargain with
the Teamsters over the 240 Leadpoint employees’ terms and conditions of employment.
Additionally, BFI could be liable for any unfair labor practices Leadpoint commits.
Practical Considerations for Employers
The Teamsters petition asks the Board to overturn 30 years of precedent and to change the
joint employer standard in this case. The fact that a union request spurred the Board to consider changing that standard is seen by many employers as suggestive that the standard will be broadened in a way that allows for the conclusion that both BFI and Leadpoint employ the 240 workers at issue. If this happens, the impact will be that more employers will be forced to bargain with unions. Primary employers also may be liable for unfair labor practices committed by a separate company that provides it with workers.
A Board decision to expand the joint employer standard for this case may also lead to other joint employer cases being reversed. One case that is particularly vulnerable is H.S. Care L.L.C., 343 NLRB 659 (2004). In that case, the Bush-era NLRB held that employees in a joint employer situation cannot be part of a single bargaining unit without the consent of both employers. A Board decision to expand the joint employer standard may signal its intent to reverse H.S. Care and to revive prior precedent that held if regular employees and contractor-provided employees share a sufficient community of interest, a single bargaining unit is appropriate without the consent of both employers.
Bullard Law will continue to monitor the BFI matter and developments related to the joint employer standard. Please feel free to contact us anytime with questions about these matters or any other labor, employment, or benefits issues of interest or concern to you.