NLRB Decision Highlights Difficulty Staffing Agencies and Franchisees Will Face When Defending Joint Employer Claims Under Browning-Ferris Test
In a 2-1 decision applying the recently-expanded joint employer test, the National Labor Relations Board (“NLRB”) held that a staffing company and construction company are joint employers, and overruled the regional director’s dismissal of an election petition.[1]
The Browning-Ferris Joint Employer Test
The NLRB’s Browning-Ferris test provides that two or more employers are joint employers of the same employees if: (1) they are “both employers [of a single workforce] within the meaning of the common law, and (2) they “share or codetermine those matters governing the [employees’] essential terms and conditions of employment.”[2] (See Related Article.) In applying this test, the NLRB holds that joint employer status exists where the putative employer (i.e., the assumed employer) has the mere right to control “the means or manner of employees’ work and terms of employment.”[3]
The NLRB’s Retro Environmental, Inc./Green Jobworks, LLC Decision
The NLRB applied the Browning-Ferris test in Retro Environmental, Inc./Green Jobworks, LLC, to find that a temporary staffing agency and construction company were joint employers of demolition and asbestos-abatement laborers.[4] The NLRB relied on the following facts in holding that the companies shared and codetermined essential terms and conditions of employment for the laborers:
(1)Although the staffing agency was primarily responsible for hiring employees, the construction company “impose[d] conditions” on whom the staffing agency could hire by requiring pre-screening, drug-tests, and completion of safety training;[5]
(2)Although the staffing agency assigned employees to project sites, it could consult with the construction company when deciding to reassign employees;[6]
(3)The construction company retained the right to request a replacement, if dissatisfied with an employee.[7] In fact, however, the construction company had not exercised this right in the six (6) months before the NLRB hearing; and
(4) Although the staffing agency determined the rate of pay, paid wages, and provided benefits, the construction company determined the number of workers to be supplied, determined hours and scheduling, and supervised employees on the job.[8]
The second issue presented in Retro Environmental was whether to dismiss the union’s petition to represent a unit of laborers because of the “imminent cessation of operations” in which the laborers worked.[9] As a general rule, the NLRB will not direct a representation election in circumstances in which it is “reasonably certain that conducting an election will serve no purpose,” such as when “cessation of the employer’s operations is imminent.”[10] In Retro Environmental, the NLRB held that an employer has the burden to prove, through “concrete evidence,” that cessation of operations is imminent and definite.”[11] The NLRB found it insufficient that the projects on which the employers were jointly working would “end shortly,” particularly because the employers had worked together in the past and did not intend to discontinue their working relationship in the future.[12]
Employer Takeaways
Retro Environmental illustrates the difficulty staffing agencies and franchisees will face in defending a joint employer claim under the NLRB’s Browning-Ferris test. Even if a company does not exercise direct control over the terms and conditions of employment—but instead merely has authority to do so—it will be found a joint employer. Employers may take steps to minimize exposure to a joint employer finding by carefully scrutinizing staffing and service agreements with third parties and eliminating reservation of rights to affect employment conditions. Employers should also contact labor counsel with concerns about possible joint employer status.
[1] Retro Environmental, Inc./Green Jobworks, LLC, 364 NLRB No. 70 (Aug. 8, 2016).
[2] Browning-Ferris Indus., 362 NLRB No. 186, slip op. at 15 (2015). Browning-Ferris Industries has sought review of the NLRB’s decision by the United States Court of Appeals for the D.C. Circuit. http://www.reuters.com/article/us-republic-servs-browningferris-appeal-idUSKCN0V02OY
[3] Id. at 15–16, 18–20.
[4] Id.at slip op. 1.
[5] Id. at 3.
[6] Id.
[7] Id.
[8] Id. at 3–4.
[9] Id. at 4.
[10] Id. (citing cases).
[11] Id.
[12] Id.