Today, we restate the Board’s joint-employer standard to reaffirm the standard articulated by the Third Circuit in Browning-Ferris decision. Under this standard, the Board may find that two or more statutory employers are joint employers of the same statutory employees if they “share or co-determine those matters governing the terms and conditions of employment.”
With these deliberately bland words, the National Labor Relations Board started a set off a legal skirmish which will rage for the next few years, at least. This passage comes from the Board’s August 27 complaint against Browning-Ferris Industries and Leadpoint Business Services, which instantly made headlines for possibly paving the way for unionizing at fast food restaurants.
To translate from the decision’s turgid prose, written under the influence of the twin muses of bureaucratic opaqueness and lawyerly over-specification, the Board has decided that it will now consider many companies that have franchises or hire out work through subcontractors as the co-employers of workers at their local franchises or subcontractors. This means they might be forced to join their franchisees or subcontractors in negotiations with (unionized) workers and be found liable for local work conditions.
The ruling was immediately characterized as the first step towards unionizing McDonalds (which preemptively appealed the ruling before it was even finished), but the decision itself was reached in a case involving subcontractors, not franchises.
Browning-Ferris Industries is a waste management company that subcontracts much of the labor at its Milpitas, California recycling plant through Leadpoint. BFI currently employes 60 of the workers at the plant; Leadpoint employes 240. According to the complaint, though Leadpoint is named as the “sole employer” of its workers, BFI required that Leadpoint employees have specified certifications and pass a drug test. BFI scheduled the plant’s shifts, limited the wages Leadpoint could pay its employees, and occasionally trained Leadpoint employees. A BFI employee once found a Leadpoint employee drinking a (hopefully superfluous) pint of whiskey, and BFI asked that he be let go.
Thus, the NLRB determined that BFI was a joint employer of Leadpoint’s workers at the plant, meaning that BFI will have to recognize and negotiate with the Teamsters Local 305, which the workers had voted to have represent it in 2013. In doing so, the Board reversed the precedent of the last thirty years, which had steadily narrowed the definition of joint employer. According to the authors of the Board’s decision, this is a kind of return to normalcy from the unhelpfully tight guidelines developed since the 1980s (though even before the 80s, the joint employer designation was never given to companies with subcontractors or franchisees).
Under it’s current standard, the Board will treat companies as joint employers of workers if both companies are “common law employers” and that both companies “co-determine” the terms of employment and working conditions.
Of course, “terms of employment and working conditions” are broad terms, but (so far) the Board has established that they include hiring/firing, supervising, scheduling, determining overtime, assigning specific tasks, and deciding the manner and method of work. Companies that request a specific number of employees from a subcontractor or require their franchises to all use the same software for logging hours could now be considered joint employers of those subcontractors’ or franchisees’ employees.
There are certain to be appeals to this decision, both from BFI itself and other companies likely to be effected, such as Yum Brands. There have already been calls for Congress to reverse the ruling (though it’s pretty obvious that President Obama wouldn’t agree to sign any resolution overturning the decision that the Board he appointed has passed).
In the meantime, critics of the Board’s decision argue that it will stultify business models that are designed for flexibility. If a collective bargaining agreement is negotiated between local workers, a subcontractor, and the company hiring through the subcontractor, it would become nearly impossible to change its terms. Severing or rebidding project contracts would be much harder- instead of just being an internal business decision, ending a contract could now require an agreement between the parent company and the workers. On the more absurd side, a subcontractor that works with multiple clients might be forced to negotiate with all of the clients who contract it out, potentially including companies in direct competition with each other.
The most dire NLRB critics warn that it’s making the subcontracting and franchising models unworkable. But the darkest predictions probably wont come to pass, if only because businesses will undoubtedly find ways around the ruling, tailoring their relationships to fit within the wording of the new ruling. If requesting a specific number of workers on a project makes a company a joint employer, businesses will just let their requirements be known in different ways. If requiring franchisees to use a specific kind of software for logging hours counts as being a joint employer, businesses might just let franchisees choose their own.
