The National Labor Relations Board, in one of its first applications of the Browning-Ferris decision, gave hope to non-union contracting entities engaged in franchising and subcontracting relationships.  After an extensive fact-intensive analysis, the Board determined that ACECO, a demolition and remediation contractor was not a joint employer with Green Jobworks, its staffing agency.

In Browning-Ferris, one of the biggest decisions of 2015, the Board held that two or more entities would be considered joint employers if each one possessed sufficient control over employees’ essential terms and conditions of employment.  As we reported here, this decision adopted a very broad definition of joint employment extending it to those entities that sufficiently exercise indirect control or even just reserve the right to do so.

The Brown-Ferris decision, if not reversed on appeal, may significantly impact employers, including those operating in fissured industries, and in particular, staffing companies, franchisors, and general and subcontractors.  Non-union contracting entities who exercise little or no authority over workers’ day-to-day activities could be on the hook for collective bargaining, responding to unfair labor practice charges, and dealing with the impacts of secondary employee strikes.

In Green Jobworks LLC, the Board revisited Browning-Ferris, and this time around it found that the union failed to establish “specific, detailed and relevant evidence” demonstrating a joint employment relationship between ACECO and Green Jobworks.  In doing so, it analyzed four specific areas where it could distinguish the facts from those in Browning-Ferris.

1. Business Organization, Hiring, Transferring, Discipline and Firing

The Board treated Browning-Ferris as a joint employer because it found that Browning-Ferris held the right to control hiring decisions, exercised transfer and disciplinary authority, and had the capacity to refuse or terminate personnel for “any reason.”  In Green Jobworks, the Board found that ACECO did not exercise a similar level of control, because (i) although ACECO could request specific employees, the staffing agency was under no obligation or commitment to fulfill these requests; (ii) ACECO, as subcontractor, did not have the authority to transfer or discipline employees; rather, the general contractor and/or the staffing agency possessed such authority; and (iii) ACECO’s limited right to refuse an employee for safety violations or other “reasonable” objections was not equivalent to the absolute right reserved in Browning-Ferris. The Board noted that this third example weighed slightly in favor of finding a joint employer relationship, but was not significant enough to tip the scales.

2. Wages

Browning-Ferris was subject to the joint employer standard because it controlled wages by mandating that the wages of contracted employees not exceed those of its own employees for comparable work.  Conversely, ACECO’s agreement did not contain a similar provision and the Board did not find that there was any exercise of control over wages sufficient to find a joint employer relationship.

3. Daily Supervision

Browning-Ferris was subject to the joint employer standard because it assigned daily tasks, subjected employees to constant oversight, and held regular performance meetings with contracted workers.  In contrast, ACECO, as subcontractor, did not exercise supervision over the contracted employees.  In fact, the general contractor ran the employee-wide orientation trainings, set the day-to-day schedule, and gave permission to both contracted and ACECO employees to be on the jobsites.

4. The Appropriateness of ACECO’s Participation in Bargaining

Browning-Ferris was subject to the joint employer standard because it had control over “bargainable issues,” including occupational safety measures, employee break times, and the speed and productivity of the work.  Here, the staffing agency or on-site hygienist (usually hired by the general contractor) possessed such authority.  Accordingly, the Board found that ACECO would be an inappropriate party to collective bargaining because it did not exhibit control as to these issues over any of the contracted employees.

The Board’s decision emphasizes the fact-specific nature of this analysis, and allows entities to enter into staffing, franchising, and subcontracting relationships without fear of incurring strict joint employer liability.  At least in the staffing context and likely in other contexts too, businesses should be mindful of the following:

• ACECO and Green Jobworks had a Master Labor Services Agreement that stated the terms of the arrangement, and gave express rights to the staffing agency. If a business employs a staffing agency to provide labor, a services agreement should clarify the agency’s exclusive responsibilities.  A business should reserve rights for itself only when absolutely necessary.  If there is no business necessity to exercise control related to hiring, placement, or scheduling of contracted employees, those rights should be reserved to the staffing agency, both in the written terms of the agreement and in practice.

• ACECO merely acted as a messenger for its general contractor, and made clear throughout the business relationship that it reserved no rights to control or influence these decisions. This is an important point that will better allow contracting entities to show that they do not possess sufficient control over contracted employees.

• Green Jobworks provided “lead workers” at ACECO work sites to track employee hours, determine work breaks, and remove employees. These supervisors from the staffing agency provided the day-to-day oversight of contracted employees, thereby removing ACECO management from involvement in these tasks.  This is a good way to avoid the implications of joint employment.

Natalie Young is the author of this article.