The NLRB has overturned a controversial “joint employer” test of whether a host company is responsible for another company’s worker or temporary worker. The National Labor Relations Act (NLRA) governs the rights and obligations of employers and their employees with respect to labor-relations. The employer’s obligations become less-clear, however, with respect to workers who are provided to the employer from staffing firms or other agencies.
For example, many employers contract with staffing agencies for labor to augment their workforce on a temporary or seasonal/cyclical basis. In many situations, the staffing agency selects and hires the worker, assigns her to work for the host company (client), and arranges for her pay and benefits. The host company directs her daily tasks and sets her schedule and hours. A question arises as to which entity (or both) is responsible for complying with worker protection laws.
The NLRB has previously ruled that both the host company and the agency have obligations to the employee if they are “joint employers.” Under the NLRA, a “joint employer” consists of two or more separate entities that “share or codetermine” matters governing a workforce’s essential terms and conditions of employment. Historically, this meant the party advocating for joint-employer status must provide evidence of the following: (1) that the alleged employer had direct and immediate control over the workforce, (2) that the alleged employer exercised that control in practice, and (3) that the employer’s exercise of that control was/is substantial and not “limited and routine.”
On August 27, 2015, the NLRB issued a controversial decision in Browning-Ferris Industries, Case 32-RC-109684, significantly expanding its standard for assessing joint-employer status of workers. In Browning-Ferris, the Board held that it was no longer required that an entity actually or directly exercise control over the worker to be considered its joint employer, so long as it reserved the authority to determine matters governing the terms and conditions of employment. The Board found that two separate legal entities (i.e. employers) could be considered joint employers of a group of employees if they both exercise at least “indirect control” over the essential terms and conditions of employment.
On December 14, 2017, the NLRB reversed this rule in its Hy-Brand Industrial Contractors decision. Hy-Brand Industrial Contractors, 365 N.L.R.B. No. 156 (Dec. 14, 2017). The Board stated, in part:
a finding of joint-employer status requires proof that the alleged joint-employer entities have actually exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’
The Hy-Brand rule is more consistent with the historical test applied by the NLRB to determine joint employer status, and should be more workable by employers.
Attorneys at FHKAD routinely draft, advise and defend employers with respect to their policies and union relations. Feel free to contact an attorney at (614) 221-1216.