The NLRB’s New Joint-Employer Test:What You Need to Know Regarding its Likely Impact

Presented by: Derek Barella

Joseph Torres

September 3, 2015

2

Today’s eLunch Presenters

Derek BarellaPartnerChicago

DBarella@winston.com

+1 (312) 558-8002

Joseph TorresPartnerChicago

Jtorres@winston.com

+1 (312) 558-7334

3

Agenda

• Historical areas of concern• Likely joint employer scenarios• Browning-Ferris – the new test• Browning-Ferris – key facts• Implications of joint employer status• Possible responsive strategies• Concluding thoughts on NLRB’s agenda

4

Historical Areas of Concern

• Liability• Exposure to alleged wrongdoing of a third-party

• Not limited to the ULP context

• Organizing• Risk of union organizing a third-party’s employees who work in your facility

• Either as a discrete “jointly-employed” unit or a broader “mixed” unit

• At times, the mixed-unit scenario was barred by the “consent” rule

• Secondary pressure• Generally, primary employer protected

5

Joint Employer Status• Potentially arises in variety of contexts:

• User/supplier

• Lessor/lessee

• Contractor/subcontractor

• Franchisor/franchisee

• Parent/subsidiary

• Predecessor/successor

6

The Historical Test

• When do two employers “share or codetermine” essential terms and conditions of employment?• Actual control must be shown

• Hypothetical, unexercised control not enough

• TLI, Inc., 271 NLRB 798 (1984)• Contract gives user employer sole and exclusive responsibility for

“maintaining operational control, direction, and supervision over drivers”

• User employer instructs drivers regarding deliveries, files incident reports with supplier, maintains driver logs and records

• Board holds contract language not sufficient absent evidence user employer “affected terms and conditions of employment”

• Board concludes actual supervision/direction was “limited” and “routine”

7

The New Test

• No longer limited to actual control• Indirect control can be enough

• E.g., third-party firm raises wages based on contractual increases

• E.g., scheduling of work flow controls third-party scheduling

• Potential control can be enough, depending upon:• Reserved contractual rights, even if unexercised

• Core vs. non-core nature of the work

• Integration of the work

• Economic commercial leverage in the relationship

• Technological oversight

8

Key “Control” Facts

• Management structure• Separate supervisors/leads/HR

• Hiring practices• Contractual right to reject

• Meet/exceed BFI’s selection procedures and tests

• Discipline and termination• Right to discontinue use

• Wages and benefits• Cost-plus contract

• Agency wages cannot exceed BFI wages

9

Key “Control” Facts

• Scheduling and hours• Control over speed of work streams/productivity standards

• Authentication of hours worked

• Work processes• Assign specific tasks through agency supervisors

• Training and safety• All safety rules applicable

• Limits on duration of employment• Never exercised

10

Implications

• Decision not limited to its facts• Joint liability for ULPs and contract violations• Union organizing (but, one more shoe to drop)

• Oakwood Care Ctr. likely to be reversed – amicus briefs requested in July

• Currently, unions can organize jointly-employed employees in a discrete unit

• Joint collective bargaining obligations• Unions can try to bring deeper pockets to the table

• Who bargains about what?

• Information disclosure may disrupt leverage among contracting entities

• Secondary pressure

11

CLE Presentation

82054

12

Browning-Ferris – What’s Next?

• Any direct appeal to the Circuit Courts will have to wait• Congressional fix unlikely in the near term• Other agencies to follow

• DOL efforts to hold large companies responsible for wage/hour compliance

• EEOC amicus brief in Browning-Ferris in support of expanded test

• OSHA “draft” memorandum indicating interest in pursuing joint employer cases against franchisors and franchisees

13

Options to Eliminate/Mitigate Risk

Terminate relationship

Modify relationship

and/or contract

Accept/embrace joint employer

status

14

Possible Responsive Strategies

• Review key areas of relationship• Contract provisions

• Physical presence

• Day-to-day interaction

• Create a decision framework relevant to your business

15

Framework for Assessment

High-Level Considerations

Employee/Facility-specific

HR/LR

Business/Economic

Enterprise HR/LR

16

Framework for Assessment

Type of Facility

UnionizedNon-Union

No Organizing

Non-UnionPrior/Ongoing

Organizing

17

Framework for Assessment

Type of Work

Core Non-core Skilled

Unskilled Integrated Non-integrated

18

Framework for Assessment

Type of Third-Party

Temp-to-HireSupplemental

Discrete Provider Demonstrated

Expertise

19

Spectrum of Options to Eliminate/Mitigate Risk

Terminate relationship to

avoid risk

Modify relationship and

agreement to mitigate risk

Accept/embrace joint employer

relationship

20

Putting It All Together

• New election rules – median time to election is now 23 days• Specialty Healthcare – micro-units• Browning-Ferris• Reversal of Oakwood Care Ctr.• Limits on employer discipline (PCA, inherently concerted)

21

Proactive Employer Strategies

• Assess your current program for measuring/addressing employee sentiment

• Identify vulnerabilities to organizing activities• Test your ability to quickly assess and respond to a campaign• Evaluate risks in key areas

• Micro-units

• Joint employer

• Supervisor status

• Employee conduct rules

• Discipline rules and procedures

22

CLE Presentation

82054

Thank you