The National Labor Relations Board ruled yesterday that franchisors and companies using staffing agencies can be considered joint employers and, therefore, are jointly liable for labor violations. The decision will potentially have major ramifications for franchises and could sabotage efforts by employers using staffing agencies to avoid the health care requirements of the Affordable Care Act.

In its August 27, 2015 decision in the matter Browning-Ferris Industries of California, et al., the NLRB determined that a waste management company was a “joint-employer” with the subcontractor it relied upon to staff its business.  It made this decision despite the fact that the waste management company neither hired nor directly controlled the employees.   Previously such direct control was necessary for the NLRB to find an employer-employee relationship.  In issuing the decision, the NLRB discarded its past polices finding them to be “out of step with changing economic circumstances.”

While most news stories have focused on the fact that this decision will make it much easier for low wage employees to unionize at fast food franchises, the decision’s effect could be felt in other areas, such as interpretation of the Affordable Care Act.  Employers with 50 or more full time or full time equivalent employees are required by law to begin offering health care to employees in 2015 (though only employers of 100 or more are subject to any penalties in 2015).   Many companies had hoped to avoid the ACA requirements by obtaining portions of their workforce from staffing agencies.  With this NLRB ruling, the door has certainly been opened to finding that the company and the staffing agency used by the company are co-employers and as such, both are responsible for offering health care under the ACA.

While the NLRB ruling certainly appears to take into account the realities of today’s workplace, this ruling once again has provided us with more questions than answers with regard to the ACA.  One thing is certain, these issues will eventually find their way into the courts.  Only then will we finally have clarity on the issue.