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
Today’s eLunch Presenters
Derek Barella
Partner Chicago
+1 (312) 558-8002
Joseph Torres
Partner Chicago
+1 (312) 558-7334
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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
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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
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Joint Employer Status
• Potentially arises in variety of contexts: • User/supplier
• Lessor/lessee
• Contractor/subcontractor
• Franchisor/franchisee
• Parent/subsidiary
• Predecessor/successor
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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”
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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
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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
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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
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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
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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
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Options to Eliminate/Mitigate Risk
Terminate relationship
Modify relationship
and/or contract
Accept/embrace joint employer
status
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Possible Responsive Strategies
• Review key areas of relationship • Contract provisions
• Physical presence
• Day-to-day interaction
• Create a decision framework relevant to your business
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Framework for Assessment
High-Level Considerations
Employee/ Facility-specific
HR/LR
Business/ Economic
Enterprise HR/LR
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Framework for Assessment
Type of Facility
Unionized Non-Union
No Organizing
Non-Union Prior/Ongoing
Organizing
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Framework for Assessment
Type of Third-Party
Temp-to-Hire Supplemental
Discrete Provider Demonstrated
Expertise
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Spectrum of Options to Eliminate/Mitigate Risk
Terminate relationship to
avoid risk
Modify relationship and
agreement to mitigate risk
Accept/embrace joint employer
relationship
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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)
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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
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