Employers in the Technology Media and Telecommunications (“TMT”) industries have generally not thought that union organizing was an issue that affected their businesses and workforces. Recent developments suggest that this is no longer the case.
These industries have earned reputations for innovative workplaces, generous benefits, and free food. At the same time, technology companies have outsourced many non-core functions such as campus security, maintenance, and transportation to third party suppliers. Employees of these vendors generally receive less generous compensation, benefits and perks than high tech employees. The different treatment of primary employees and ancillary workers employed by subcontractors has given rise to claims that the industry is divided into the “haves” and “have not’s” and provoked a rising backlash among many workers.
Unions have been using this discontent to increase their influence in the TMT industry. Facebook’s shuttle bus drivers voted to unionize this past November and ratified a first contract on February 21 of this year. On February 27th shuttle bus drivers employed by a contractor that provides shuttle services for Apple, eBay, Yahoo, and Zynga employees voted to be represented by the Teamsters. At the same time , the Service Employees International Union (“SEIU”), which has been actively organizing fast food workers nationwide, has been working to organize custodial employees and security guards of high tech companies in the Silicon Valley. Most of these organizing campaigns are focused on the employees of subcontractors retained by TMT companies, but that has not deterred unions from pressuring those companies directly.
At the same time, the SEIU and other unions have been urging the National Labor Relations Board (“Board” or “NLRB”) to expand the definition of a joint employer under the National Labor Relations Act (“Act”). The Board’s General Counsel is actively supporting this effort and urging the Board to adopt a much broader “economic realities” test that would result in more frequent and expansive findings of joint employer relationships. If the Board agrees, it will likely redefine the definition and could adopt a standard that would hold TMT companies to be joint employers with their cleaning, transportation and food service suppliers.
Currently, only entities which exercise direct control as opposed to “limited or routine” control are held to be joint employers. The General Counsel is asking the Board to expand the definition to cover entities who exercise “indirect control over significant terms and conditions of employment of another entity’s employees.” This could foist joint employer status on many TMT employers and directly involve them in their contractors’ collective bargaining relationships.
The General Counsel’s proposed standard for determining joint employer status is “where, under the totality of the circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working conditions of the other entity’s employees such that meaningful bargaining could not occur in its absence.”
Organizing campaigns from the west and expanded joint employer liability from the east is poised to trap TMT employers in a perfect storm. TMT employers may be able to address these concerns by structuring their agreements and relationships such that they do not retain or exercise sufficient indicia of control over their subcontractors’ employees to support findings of joint employer status even under the standard the General Counsel has urged the Board to adopt. The General Counsel has proposed a number of examples of control sufficient to trigger joint employer status including: (1) veto power over hiring or the right to reject the supplier firm’s employees; (2) retaining the contractual right to direct or supervise the contractor’s employees; (3) requiring employees to abide by the user firm’s rules; (4) dealing with employee grievance and personnel issues; (5) affecting employees’ work schedules or work hours; (6) affecting employee discipline; (7) making recommendations to the supplier firm during the collective-bargaining process or otherwise retaining the right to give such input; and (8) giving employees daily assignments.
Employers in the TMT industries and other areas should review what functions are performed by employees of subcontractors and how those employees are managed. Businesses should consider revising their agreements with supplier employers to remove terms which permit them to exercise control over the contractor’s employees in favor of terms which focus on the quality of the product the contractor is expected to deliver. By planning ahead, TMT employers can may be able to reduce the risk of being found to be joint employer with their contractors’ employees.