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‘It’s a Big Deal’: NLRB Expands Law on Joint Employers

September 1, 2015
By Steven Wishnia

A National Labor Relations Board ruling last week could eliminate a common way employers insulate themselves from responsibility for wages and conditions, unions trying to organize low-wage workers say. The board ruled Aug. 27 that a California recycling company qualified as the “joint employer” of workers at one of its recycling plants, even though it had a staffing agency hire them.

“In the commercial cleaning and security industries, building owners are typically the real decision-makers who have the power to set wages, hours, and to bar individual employees from the workplace,” Local 32BJ of the Service Employees International Union said in a statement. “This decision opens the way for us to hold those building owners accountable for their actions and to bargain directly with building owners to resolve disputes amicably, rather than being relegated to bargaining with contractors who lack the ability to settle without the owner’s consent.”

“It’s a big deal,” says Daniel Kroop, organizing director for 15now, an independent national group that builds community support for a $15 minimum wage. Fast-food workers “won’t have to engage each franchisee,” he says. “They’ll be able to get the big boys to the table.”

The ruling backed Sanitary Truck Drivers and Helpers Local 350 of the Teamsters against Browning-Ferris Industries of California and Leadpoint Business Services, the staffing agency the company used to hire workers at its Newby Island Recyclery, in the San Jose suburb of Milpitas. The 3-2 vote went along party lines, with the board’s three Democratic members supporting the union.

It reversed a Reagan-era standard that companies that hire workers through temp agencies can only be considered joint employers if they directly exercise control over the terms and conditions of employment. Instead, the NLRB said, those companies can be held responsible if they possess “sufficient” control, even if it’s “exercised indirectly—such as through an intermediary.”

At the Newby Island facility, the majority noted, Browning-Ferris Industries set hiring standards for Leadpoint, including requiring workers to pass a drug test and recommending that some be fired. It prohibited Leadpoint from paying temporary workers more than what BFI employees get for similar tasks. It determined the schedule of shifts, including overtime and breaks; dictated the number of workers assigned to the different streams of materials coming into the plant; provided training; and set production goals and safety standards.

BFI’s direct control over employees, the Teamsters argued, was evinced by its demanding compliance with “detailed specifications, including the number of employees on each line, where they stand, what they pick, and at what rate they sort.” The union also asserted that the NLRB needed to change the joint-employer standard because otherwise, a company could use the “calculated restructuring of employment and insertion of a contractor to insulate itself from the basic legal obligation to recognize and bargain with the employees’ representative.”

The NLRB agreed, noting that contingent employment has grown dramatically in the last 25 years, with the number of temps rising from 1.1 million in 1990 to 2.87 million in 2014. “This development is reason enough to revisit the Board’s current joint-employer standard,” it said. It also held that the previous standard was narrower than what was required by the Supreme Court in a 1982 case that also involved Browning-Ferris.


“In this case, for instance, BFI communicated precise directives regarding employee work performance through Leadpoint’s supervisors,” the NLRB said. “We see no reason why this obvious control of employees by BFI should be discounted merely because it was exercised via the supplier rather than directly.”

The two dissenters, Philip A. Miscimarra and Harry I. Johnson III, argued that the new standard was far too broad, complex, and confusing, and that it would disrupt labor relationships in place for more than 30 years. For example, they said, a cleaning-services company that had three clients might have to negotiate contracts with three different unions and share bargaining with each client.

“This change will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity,” they wrote. They contended that it “reflects a desire to ensure that third parties that have ‘deep pockets’” become targets for union organizing, so they will be “exposed to strikes, boycotts, and other economic weapons, based on the most limited and indirect signs of potential control.”

The new rule would also undermine existing franchise arrangements, the dissenters said, because it “threatens to automatically sweep every parent or affiliate company in America into being the ‘employer’ of a subsidiary’s employees.” Companies’ directives to franchisees are mainly about maintaining the brand’s integrity, they added.

Companies that work through franchises or outsourcing should be deemed employers, union organizers say. “McDonald’s is the boss—that’s true by any standard,” Kendall Fells, organizing director of Fight for $15, said in a statement provided by the SEIU. “The company controls everything from the speed of the drive-thru to the way workers fold customers’ bags. It’s common sense that McDonald’s should be held accountable for the rights of workers at its franchised stores.”

“Redefining the employee-employer relationship is a necessity across many industries increasingly moving towards low-bid subcontracting systems that often have patchwork oversight and put working people at a financial disadvantage,” Local 32BJ said.

This updated standard “is urgently needed,” Christine Owens of the National Employment Law Projectsaid in a statement, “as employer subcontracting and use of labor intermediaries such as staffing firms is on the rise, sometimes resulting in degraded working conditions and diminished worker access to collective bargaining…. When companies like BFI decide to outsource portions of their workforce to staffing companies or other labor subcontractors, they should be held accountable, along with their contractors, for labor practices and working conditions.”

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