Under this standard, the Board may find that two or more
statutory employers [i.e., employers subject to the NLRA] are joint employers
of the same statutory employees if they “share or codetermine those matters
governing the essential terms and conditions of employment.” In determining
whether a putative joint employer meets this standard, the initial inquiry is
whether there is a common-law employment relationship with the employees in
question. If this common-law employment relationship exists, the inquiry then
turns to whether the putative joint employer possesses sufficient control over
employees’ essential terms and conditions of employment to permit meaningful
collective bargaining.
Using the new standard, the Board will no longer consider
whether a company which possesses
authority over terms and conditions of employment (through the contract with
the temporary agency) actually exercises
that authority. Neither will it
consider whether the authority or control of the company is direct or
immediate; indirect authority or control through an intermediary would be
sufficient to find joint employment. In
other words, authority or control over terms and conditions of employment may
only be theoretical for the Board to find an entity is a joint employer. While the Board acknowledges that its decision
will negatively impact the predictability of whether a particular company will
be found to be a joint employer, it leaves future cases to be worked out based
on their particular facts. It also
acknowledges that “it is
certainly possible that in a particular case, a putative joint employer’s
control might extend only to terms and conditions of employment too limited in
scope or significance to permit meaningful collective bargaining.”
Importantly,
even if a company is found to be a joint employer based on its indirect authority
over certain terms and conditions of employment, it would “required to bargain
only with respect to such terms and conditions which it possesses the authority
to control.”
In the case at hand, the company had 60 employees on its
payroll, who worked outside and were already represented by the union which was
seeking to also represent the company’s temporary employees. Pursuant to an indefinite temporary labor
services agreement, a temporary agency supplied the company with 240 employees
that worked inside sorting materials on conveyor belts. The temp agency also supplied and paid the
supervisors and managers of its employees assigned to the company. The company’s officers and managers oversaw
the entire operation and met frequently and regularly with the temp agency
management. Only the temp agency had
human resources staff on site and performed all of the interviewing, hiring,
testing, etc. However, the company
specified that it wanted all of the applicants to be drug tested and to not be
any of its former employees and retained the right to reject or discontinue any
agency employees.
Only two temp employees had been terminated because of
complaints by the company (involving sabotage and drinking on duty) and there
was no evidence that the company was otherwise involved in any disciplinary
actions or investigations. The agency
paid the employees on its payroll, set work schedules and provided all
benefits, including health insurance, vacation and sick days. However, the company’s contract specified the
wage rates through a cost-plus arrangement.
The company also established the shift schedules and operational needs,
set the productivity standards, established the number of workers per conveyor
belt per shift and the employee’s time sheets were signed by the company
supervisors, not the agency’s. Although
most job training and orientation was provided by the agency, the company
sometimes provided substantive training to the employees. The company required the employees to adhere
to its safety protocols and rules and provided the training on those matters. The
conveyor belt speed was a source of friction between the employees and the
company. Company supervisors frequently
told the employees directly that they were not working quickly or efficiently
enough.
In addressing
whether the company had to bargain with the union about the employees, the
Board started with the premise that the common law agency test determines
whether an employee is employed by the employer because independent contractors
and other non-employees are not protected by the NLRA.
Section 220(1) of
the Restatement (Second) [of Agency] provides that a “servant is a person
employed to perform services in the affairs of another and who with respect to
the physical conduct in the performance of the services is subject to the
other’s control or right to control.”
(The dissent argued that
the majority was actually applying the economic realities employment test from
the Fair Labor Standard Act, which is more expansive than the common law
test). Based on this, the Board focused
on the putative employer’s right to control the employee’s manner and means of
performing the work. Therefore, “mere ‘service under an agreement to
accomplish results or to use care and skill in accomplishing results’ is not
evidence of an employment, or joint-employment, relationship.” In other words, the Board clarified that it did
not suggest today that a putative employer’s bare rights to
dictate the results of a contracted service or to control or protect its own
property constitute probative indicia of employer status. Instead, we will
evaluate the evidence to determine whether a user employer affects the means or
manner of employees’ work and terms of employment, either directly or through
an intermediary.
In applying its new test to the case at issue, the Board
found that the company was a joint employer because it was a common law
employer of the employees in question and possessed authority over essential
terms and conditions of employment so as to permit meaningful collective bargaining. In particular, it found that the company had
control over the following terms and conditions of employment:
·
Hiring,
firing and discipline. The company
required the agency’s hiring standards to meet or exceed the company’s own
standards, to include drug testing, to exclude former company employees, to
dismiss any employee at the company’s request.
There was evidence that the company had only requested two employees to
be removed (based on investigations conducted exclusively by the agency)
·
Supervision,
direction of work and working hours.
The Company exclusively controlled the speed of the conveyor belts, productivity
standards, the content of positions, and the placement of workers (although not
the identity of workers), signed employee time cards and indirectly supervised
workers through the agency etc. The
Company’s control was so extensive that the agency would be unable to
meaningfully bargain over overtime, break times, safety or speed of work.
·
Wages. The agency’s contract with the company
established a wage ceiling, although the agency paid the employees, provided
and administered benefits, and maintained all payroll records. The contract was a cost-plus contract where
the agency charged a percentage above specified pay rates for the employees. “Although this [cost-plus] arrangement,
on its own, is not necessarily sufficient to create a joint-employer
relationship, it is coupled here with the apparent requirement of BFI approval
over employee pay increases.”
NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.
