Features, Municipal Government, National

NLRB Reverses Expansion of ‘Joint Employer’ Rule

December 18, 2017

By Steve Wishnia

WASHINGTON—In its first major decision of the Trump era, the National Labor Relations Board voted 3-2 to reverse the board’s Obama-era expansion of when companies that hire workers indirectly can be held “joint employers” responsible for working conditions and labor-law violations. Outgoing chair Philip A. Miscimarra joined Trump appointees Marvin E. Kaplan and William J. Emanuel in overruling the standard set by the NLRB’s 2015 decision that Browning-Ferris Industries had to bargain with Teamsters Local 350 at one of its California recycling plants, even though the staffing agency it hired the workers through was their official employer. Mark Gaston Pearce and Lauren McFerran, the two remaining Democrats, dissented.

The board ruled that in order to be considered an employer, a company had to control the workers’ essential employment terms “directly and immediately” rather than indirectly, and that reserving the right to have direct control wasn’t enough, they had to actually exercise it.

“For decades, the NLRB has understood that employers occasionally use schemes whereby they direct work performed by employees of nominally separate companies in order to evade their traditional labor-law obligations,” the Teamsters responded in a statement. “Rolling back the joint-employer ruling is an attack on hardworking Americans who have little recourse when they are victimized by such schemes,” said General President Jim Hoffa. “With this latest decision, the NLRB is scrapping critical protections for millions of workers.”

The board’s majority also contended that the joint-employer standard set by the Browning-Ferris Industries decision was so vague that “a homeowner hiring a plumbing company for bathroom renovations could well be deemed a joint employer of the plumbing company’s employees!”

That’s not the way it works in the real world, National Employment Law Project general counsel Catherine Ruckelshaus told LaborPress. Employers insert “intermediaries”—outsourcing jobs or hiring workers through a staffing agency—to avoid having to bargain with a union or take on an employer’s legal responsibilities. Many lower-skill jobs, she adds, are simple enough so that a company can set the basic procedures and parameters without having to exercise direct supervision.

“The Browning-Ferris decision recognized that in these arrangements, companies that contract out work may still retain control over the conditions and standards that govern the work and how the workers doing the jobs are treated,” NELP executive director Christine Owens said in a statement. “Browning-Ferris rightly held these companies responsible for the labor standards under their own control. With this reversal, the Trump NLRB has decided to let them off the hook.”

“Employers are trying to count as little as possible as ‘control,’” Ruckelshaus explains. If a company “tells another company to tell the workers what to do,” that counts as only “indirect,” not “direct” control.

Browning-Ferris, she says, is a “perfect example.” It hired 260 people through a staffing agency who worked on its property, but were not getting direct orders from a BFI supervisor. But when Teamsters Local 350 tried to negotiate a contract with the staffing agency, the workers’ official employer, they couldn’t bargain meaningfully, because BFI dictated pay, work rate, and more.

Such practices are increasingly widespread. Amazon hires workers for its warehouses and shipping centers through two layers, logistics contractors and staffing agencies. At Nissan’s plant in Canton, Mississippi, up to 40% of the 6,400 production workers are hired through Kelly Services and other temp agencies. They were not eligible to vote in the election last August where workers rejected representation by the United Auto Workers. The UAW filed an amended complaint with the NLRB just before the vote seeking to have Nissan declared a joint employer with Kelly.

The NLRB majority also argued that because the Browning-Ferris joint-employer standard was so broad and so new, it “subjected countless entities to unprecedented new joint bargaining obligations that most may not even know they have,” put the franchise model of business at risk, and “did violence” to the law protecting an employer’s business partners from secondary strikes and boycotts. They also said the standard made labor negotiations impossibly complicated: If three companies that hire a cleaning contractor were all deemed joint employers, they wrote, they might all have to negotiate separate and sometimes conflicting union contracts.

“We are pleased that the NLRB’s new majority stood up for the millions of Americans whose jobs were put at risk by the Obama NLRB’s toxic decision,” Rep. Virginia Foxx (R-N.C.), chair of the House Committee on Education and the Workforce, said in a statement. The Obama board, the statement added, had “placed itself squarely in the middle of the employer-employee relationship, changing it in a way that hurt working families and small businesses but empowered union interests.”

Pearce and McFerran, the two dissenters, accused the majority of rushing to reverse the standard without holding any hearings or even having a case where there was a genuine conflict. There was no question that the employers involved in the case—Iowa and Illinois construction companies accused of unfairly firing seven strikers—were not separate entities, as they were owned by the same family. The board held unanimously that they were not.

“This is a single-employer case, not a joint-employer case,” the two wrote. “Yet the majority insists that this case must be resolved under joint-employer principles. This makes sense, of course, only in light of the majority’s overriding goal to reverse BFI.”

Pearce and McFerran also said the majority had given “no real-world examples or remotely plausible hypotheticals” that the new standard had caused actual harm.

“The predictability that the majority achieves here,” they concluded, “is a one-sided assurance to employers that by retaining a nominal distance from the supervision of workers, they can exert control and still avoid statutory bargaining obligations.”

December 18, 2017

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