Joint Employment: NLRB Ruling Poses New Risks for
Companies that contract with other companies to provide workers may be tagged as “joint employers” liable for issues not of their own making.
dealing with worker relationships, federal and state employment
and labor laws pose a confusing, frequently changing array of
requirements, prohibitions and other risks.
complexity of employment laws and regulations can reach
extraordinary heights when companies utilize staffing services,
independent contractors, subcontractors, temporary agencies,
leased workers or other non-traditional working arrangements. In
such cases, courts, government agencies and employers often must
wrestle with the question of who actually employs the companys
workers and, thus, must comply with the obligations that come
with the employment relationship.
doctrine of joint employment, that may not be an either/or
question; in a growing number of cases, the answer may be that
the workers actually have more than one employer.
In its recent
ruling involving Browning-Ferris Industries,
the National Labor Relations Board (NLRB) announced a new
standard for determining whether employees will be considered to
be jointly employed.
Under the BFI ruling, the NLRB will
consider a company a joint employer if the company either (a)
actually exercises control over workers or (b) reserves the
right to do so, even indirectly, even if it has never exercised
that authority. Two of the five NLRB members, who expressed
concerns about the expansive nature of this new standard,
dissented from the decision.
The BFI decision involved workers
engaged to work at BFIs recycling plant through a staffing
agency, Leadpoint. While BFI solely employed a number of
employees at the plant, Leadpoint supplied some of the workers
who performed certain jobs. When a labor union attempted to
organize employees at the worksite, the union contended that
both Leadpoint and BFI should be required to engage in
The NLRB ruled for the union, finding
that, based on the contract between BFI and Leadpoint, the two
companies were joint employers.
Under the contract between BFI and Leadpoint, BFI delegated to
Leadpoint a number of decisions, such as hiring, firing and wage
determinations. BFI provided certain criteria to Leadpoint in
making those decisions, such as requiring drug testing and other
minimum qualifications for workers. BFI also had the right to
terminate its arrangement with Leadpoint at any time and had the
right to ensure that Leadpoints workers wages were within the
range of wages for BFIs own employees.
In the view of the NLRB majority, those
contractual features were sufficient to find joint employment,
even though there was no evidence that BFI had actually used its
abstract contractual authority to dictate employment policies or
Implications for Employers
The NLRBs decision holds significant
implications for companies that have business arrangements in
which they partner with others. Examples of such arrangements
hiring employees through
temporary employment agencies;
contractors or subcontractors who have employees;
outsourcing certain job
In the view of the dissenters, the decision could reach even further,
even affecting relationships that are seemingly as arms length
as landlord/tenant. As a common example, a company might be held
responsible for back pay as a result of a business partner
terminating an employee for something as seemingly innocuous as
a refusal to sign a confidentiality agreement that the NLRB
views as overly broad. As in BFIs case, the company could
ultimately be faced with having to bargain with a union
representing workers that, as far as the company knew, were not
even its employees.
BFI may appeal the decision in federal
court but, as of the date of this article, it had not yet done
so. As a result, the decision of the agency is in full force and
In addressing the potential consequences
of this new standard, employers should seek the help of an
experienced employment attorney in reviewing their ongoing
arrangements with staffing companies, outsource providers,
contractors and subcontractors to determine whether they may be
subject to unintended joint employment relationships.