The “joint employer” decision in Browning-Ferris Industries of California, Inc. was not a surprise. The NLRB has had its attention upon contingent workers (staffing and subcontracting) for years because they make up 5-8% of the nation’s work force. Those percentages may double by 2022. The Board decided that BFI was a joint employer with a staffing company for purposes of collective bargaining because BFI had indirect control and reserved contractual authority over essential terms and conditions of the employees from the staffing company.1 This revised standard will likely have a significant and immediate impact on franchise businesses. It can obviously affect subcontractor arrangements where a company uses a third-party employer to manage its workforce. However, the BFI decision does not create significant concerns in the typical staffing arrangement where the staffing company recruits and places temporary or seasonal workers with its clients.

It is worth noting that the BFI decision came months before a decision is expected in Miller & Anderson (Briefs by 09/30/2015). In that matter, the Board is re-evaluating its precedent from Oakwood Care Center, 343 NLRB 659 (2004), that a unit combining temporary employees and regular employees of a staffing company employer and its client employer is appropriate only if both employers consent. At present, the Board will not force multiemployer bargaining for temporary and permanent employees, but the Miller & Anderson decision could change that rule.

Since the Board already changed the “joint employer” standard, what does it mean for Miller & Anderson ? Based upon the makeup of the Board and its recent decisions, it’s safe to assume that the decision in Miller & Anderson will favor the unions. Therefore, it is imperative that companies with contingent workforces confirm that preemptive measures are in place today. We will present a separate article on avoiding disruption based upon a Miller & Anderson decision.

First, a review of the BFI decision and its consequences.2

What are Joint Employers?

Joint-employer status means that two separate but distinct businesses have some degree of authority to control working conditions of a group of workers, such that each is considered the “employer” of the workers. For most employment law matters (harassment, discrimination, retaliation, FLSA) and some labor law matters (unfair labor practices, OSHA) the evaluation is on the culpable party, and a joint employer is not liable unless it knows of and/or participates in the unlawful behavior. The FMLA places responsibilities on primary and secondary employers.3

For labor law pertaining to collective bargaining, the old standard for joint employers required an employer to both possess authority and exercise authority over employees. The new standard from BFI is that two or more employers are joint employers of the same employees if they can share or codetermine those matters governing the essential terms and conditions of employment. Under BFI, to be a “joint employer” for purposes of collective bargaining, an employer only needs to possess authority, also known as indirect exercise of control, over essential terms and conditions of employment.

What does it mean for Staffing Companies + their Clients?

For collective bargaining purposes, the BFI decision does not mean much for staffing companies and their typical clients. The BFI case was unique in that BFI tried to relinquish total control over its recycling plant floor to a staffing company.4 However, in most typical arrangements with staffing companies, clients retain and exercise control over the workforce and work processes. Clients use their own supervisors, decide whether to retain temporary employees, and dictate all rules for business operations (schedules, safety, performance methods and standards). These clients were already joint employers for collective bargaining purposes, and have been joint employers for the past 40 or 50 years, regardless of the BFI decision. In 1967, the Board found that Checker Cab, which supplied, trained, scheduled and disciplined taxi drivers for independent cab companies, was a joint employer with the owners of the independent taxi-cab companies.5 In 1971, the Board found that Hamburg Industries, which contracted its workforce from Fidelity Services, was a joint employer for collective bargaining because Hamburg scheduled the work, provided work instructions, rejected or approved work, and had control over wages.6 In 1973, the Board found that United Dairy Farmers, Inc. (UDF), which contracted for drivers from Floyd Epperson, was a joint employer because UDF set the drivers’ routes and schedules, generally supervised the drivers, and participated in determining wages and discipline.7

The BFI decision applies to contingent workforces where the client attempts to abdicate total control over the workforce to a third-party employer.8 In the typical staffing arrangement where the client has retained and exercised control, the BFI decision is irrelevant. The client has always had the obligation to collectively bargain the terms and conditions that it controlled; a union just never asked.

In BFI, the Board confirmed this principle and expanded the scope. Now, “as a rule, a joint employer will be required to bargain only with respect to such terms and conditions which it possesses the authority to control.”9

What are Essential Terms + Conditions of Employment?

The NLRB takes a broad, inclusive approach in determining whether an employer can control essential terms and conditions of employment. In general, the main three (3) areas are (1) hiring, firing, discipline, (2) supervision and direction, and (3) wages.10 Examples of “essential terms and conditions of employment” by a Client include the following:

  • Controlling scheduling
  • Assigning work
  • Rejecting or terminating workers
  • Setting wage rates
  • Setting working hours
  • Approving overtime
  • Dictating number of workers to be supplied
  • Determining the manner and method of work performance
  • Inspecting and approving work
  • Terminating the contractual agreement
  • Implementing safety policies
  • Training workers

Most clients have already been exercising control over many of these terms and conditions. If a union wanted to organize the temporary workers before BFI, it could have done so and the client would have been a joint employer for collective bargaining. The client would be responsible for negotiating those essential terms and conditions that it actually controlled, and now, could control.

Why Does the BFI Decision Matter?

The public fear of the decision from BFI stems from its expansiveness. Potentially, any entity that has the ability to manage or control the workforce of another entity can be named as a joint employer with that other entity. The decision was based upon a fact-intensive evaluation which is open to interpretation and application. In theory, the decision opens the door for unsuspecting entities to be brought into collective bargaining as a joint employer.

However, as discussed above, most companies using contingent workforces through staffing companies were already joint employers for collective bargaining purposes. If unions were not knocking on their doors before BFI, the BFI decision does not give any additional incentive.

The real effect of the BFI decision will be felt in franchise relationships. If the franchisor controls terms and conditions such as promulgating work rules, setting compensation, benefits, schedules, or rates or methods of payments, and/or overseeing product quality, the BFI decision opens the door to joint employer bargaining with the franchisor and franchisees.

Another area of concern is that a joint-employer may no longer be insulated from heretofore illegal secondary coercion, picketing, etc. (whereby the union attempting to organize one company could bring pressure to bear by picketing or boycotting the other joint employer).

Other concerns may arise depending upon the ambition of unions. [11] A joint-employer may have to respond to a union organizing petition, where a union seeks to represent employees placed by another employer. If the challenges to the petition fail, a joint-employer can be required to bargain with the union and negotiate over the limited terms of the other business’ employees that it can control. Finally, if a union tries to use a staffing company as a way into a host company and the host company then terminates the relationship, it could possibly open the door for a union to present an anti-union animus claim against the host company.