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In a major decision on August 27th, the National Labor Relations Board (NLRB) expanded the joint employer definition by ruling that companies may be considered joint employers with their contractors and franchisees.
The Board’s decision pertained to Browning-Ferris Industries (BFI), specifically its recycling and waste processing facility in California, where employees of the staffing agency Leadpoint worked. While BFI and Leadpoint are separate companies and have separate supervisors and HR departments in the facility, BFI had some indirect control over Leadpoint employees. BFI action sometimes led to the disciplining of Leadpoint employees, and, due to an agreement between the two companies, Leadpoint employees could not receive higher pay than BFI employees performing the same tasks.
Since the Reagan era, the NLRB had maintained that for an organization to be considered a joint employer it must exercise direct and immediate control over the terms and conditions of employment; this allowed many organizations to avoid liability for labor violations by asserting that they had no real control over employees. But the ruling in late August significantly broadened the definition of joint employer. Now, a joint employer need only have potential and indirect control over employees. Because BFI had this degree of control, the NLRB ruled that it was a joint employer with Leadpoint. The ruling will increase the potential responsibility of certain companies, such as franchisors and those who rely heavily on staffing agencies, and may make union involvement with those organizations more likely.
The full ramifications of this ruling are not yet known—for example, any effect on determining employee count for FMLA and ACA purposes, or OSHA liability—but we’ll be closely following this matter and posting updates here as more information becomes available.
To learn more about how GTM helps businesses of all sizes stay compliant with tax and labor laws, contact us at (518) 373-4111.
