Recently, the NLRB reviewed the question of whether a contractor’s employees who were providing services at a facility owned by a separate entity were jointly employed by both the contractor and the facility owner. In Browning-Ferris Indus., 362 NRLB No. 186 (NLRB 2015), the Board concluded that they were. With the declared purpose to “modify the legal landscape for employers” and to “[encourage] the practice and procedure of collective bargaining”, the Board overruled decades of precedent that separated an independent contractor’s employees from an owner’s employees for purposes of collective bargaining.
In Browning-Ferris, BFI owned and operated a recycling facility. BFI contracted with Leadpoint Business Services (“Leadpoint”) to sort materials as they moved through the recycling process. Leadpoint assigned the employees to carry out the sorting duties. However, BFI required all Leadpoint employees working on its premises to pass a drug screen and remain drug-free. Also, Leadpoint employees working at BFI had to have qualifications that met or exceeded BFI minimum standards, and Leadpoint was prohibited from hiring BFI employees who had previously been considered ineligible for employment with BFI. Although the parties’ agreement indicated that Leadpoint had the sole responsibility to review and evaluate employee performance and discipline employees, BFI retained the right to reject any of Leadpoint’s personnel or have them removed from its property. As is typical in many service contracts, Leadpoint was paid on a cost-plus basis, meaning that BFI paid the wages incurred by Leadpoint for the services, plus an agreed mark-up percentage.
BFI’s employees are represented by a union. The union sought to include Leadpoint’s employees working at BFI in BFI’s bargaining unit, and argued that BFI and Leadpoint were joint-employers. To support its position, in addition to pointing out the facts described above, the union noted that BFI established the shift schedules and could effect changes in operational requirements, including the speed of the conveyor that carried the materials to be sorted. BFI also met daily with Leadpoint supervisors to go over the day’s operating plan. Further, there was an occasion when a BFI supervisor reported seeing several Leadpoint employees passing a whiskey bottle on the premises. The BFI supervisor suggested that the employees be terminated. On another occasion, a BFI supervisor reported surveillance footage of a Leadpoint employee intentionally damaging BFI property, and said he “hoped” that Leadpoint would agree that termination of the employee was appropriate. In both situations, Leadpoint discharged the employees involved.
Following established Board precedent, the Regional Director held that the above incidents and BFI’s contractually reserved rights failed to show that BFI and Leadpoint were joint-employers. Leadpoint was solely responsible for employee benefits and wages, the number of employees who would work, the times when they would work, and the hiring, firing, and discipline of employees. The Regional Director found that the reporting and recommendation for discipline of certain employees was not an exercise of control, and that BFI’s establishment of shift schedules, the speed of the conveyor, and daily operational requirements did not create a level of control warranting joint-employer status. Thus, the Regional Director concluded that BFI and Leadpoint did not share or codetermine those matters governing the essential terms of employment.
The NRLB reversed and ordered immediate recognition of the union. Using sweeping language, the Board concluded that its prior decisions regarding joint-employer status were too restrictive, and adopted an expansive interpretation of a common-law agency relationship as the basis for determining joint-employer status. In the Board’s view, a joint-employer relationship may be found in any situation where a putatively separate entity has the direct or indirect right to effect terms and conditions of employment of another entity’s employees, even if no action is taken pursuant to such rights. According to the Board, retaining a right to reject or remove workers, paying on a cost-plus basis with the right to approve pay rates, approving hours worked and overtime, restricting or mandating the number of workers assigned under the contract, establishing working hours or shifts, setting minimum qualifications of workers, and establishing production standards or daily operational tasks to be performed are all factors that demonstrate direct or indirect control over terms and conditions of employment.
Although the Board maintains that “mere service under an agreement to accomplish results or to use care and skill in accomplishing results is not evidence of an employment or joint-employment relationship,” service contracts generally contain terms such as those which the Board now concludes evidence joint-employer status. As a result, workplaces where unionized and non-unionized workers work together or side-by-side are prime targets for union representation petitions.
Of course, this is not an exhaustive discussion of the law applicable to these issues. For more information on this topic, please email Keith Sieczkowski, Labor & Employment Lawyer with BRANSCOMB|PC. His contact information is firstname.lastname@example.org or (361) 886-3800.