Today’s Presenter

John Merrell Employment and Labor Law Attorney

Ogletree Deakins

What’s going on?

April 2014

December 2014

NLRB grants review in BFI (subcontractor situation)

General Counsel authorizes complaints vs. McDonald’s (franchisee situation)

What’s going on?

August, 27 2015

NLRB issues decision in Browning-Ferris Industries (BFI)

Reversed 30 years of precedent and created a new standard for determining joint employer status

30 years

What is a Joint Employer?

Not mentioned by Congress in NLRA Created by the NLRB to reach independent companies that: •  Share control/co-determine employment

terms of another company’s workers •  Exercise that control in a manner that is

“immediate and direct” •  Does not apply where the companies

aren’t legitimately separate legal entities (“single employer” doctrine)

What does it mean to be a Joint Employer?

If you and another company are joint employers, then each of you: •  Can be held liable for the other company’s

unfair labor practices •  Could be obligated to bargain with a union

representing the other company’s employees

•  Could lose “secondary boycott” protection

What relationships could give rise to a Joint Employer finding?

●  Franchisor / Franchisee (Ex: McDonald’s)

●  Contractor / Subcontractor ●  Primary employer and

staffing agency

The Old Standard

Laerco and TLI 1984

●  Legally separate entities are joint employers ONLY when they actually share the ability to control or co-determine essential terms and conditions of employment (hiring, firing, discipline, supervision and direction of employees)

●  Putative employer’s control must be “direct and immediate”

The Old Standard

Laerco and TLI 1984

●  “Limited and routine” instruction is not enough to make you a joint employer

●  Employer may be able to tell

another company’s employees what to do, but not how to do it

The Old Standard

Laerco and TLI 1984

“Immediate and direct” Making personnel decisions:

Setting individual wages Hiring, disciplining or discharging workers Setting individual employees’ schedules Resolving workers’ disputes

It does not mean: Pointing out issues with workers Setting operating hours Requiring particular attire or safety equipment “Limited and routine” directions on services to perform

Example: TLI, Inc.No Joint Employment

TLI

Crown

Crown did not hire, fire or discipline TLI drivers  

Drivers reported accidents to Crown → TLI investigated and determined discipline If drivers’ conduct concerned Crown, it gave incident reports to TLI → TLI conducted its own investigation

Example: TLI, Inc.No Joint Employment Although Crown may have exercised some control over the drivers, Crown did not affect their terms and conditions of employment to such a degree that it may be deemed a joint employer Crown’s daily supervision was not meaningful, but rather, limited and routine

TLI

BFI International Brotherhood of Teamsters (IBT)

petitioned for joint employer status of BFI and Leadpoint at BFI Recyclery

Sorting line operations outsourced to Leadpoint

Leadpoint had 15 on-site supervisors and an HR

Representative to manage its 200 employees

BFI not involved in hiring, supervising, disciplining or

discharging employees

BFI

BUT ●  Cost-plus contract ●  BFI owned building and equipment ●  BFI determined hours sorting line operated ●  BFI provided “target” headcount estimates ●  BFI occasionally observed employee misconduct and

reported it to Leadpoint ●  Leadpoint investigated and made decisions ●  BFI on (rare) occasions (allegedly) gave directions to one

or two employees  

ALSO ●  BFI required drug testing ●  BFI retained the right to demand that Leadpoint stop

using a particular worker ●  BFI imposed safety requirements ●  BFI controlled the speed of the conveyer belt

BFI

BFI

●  BFI not a joint employer with Leadpoint ●  Leadpoint solely controlled individual employee

decisions ○  Made all hiring, firing and discipline decisions

●  Leadpoint’s staff of supervisors managed workers ●  Any direction by BFI was “limited and routine”

Area Regional Director

NLRB: We would like to see briefs on whether we ought to reconsider the existing standard

The New Standard

Pre-1984 standard

●  Focuses on “industrial realities” ●  Direct OR indirect control over

terms and conditions ○  OR the unexercised potential to control

terms and conditions of employment ○  Does the company impose operational

requirements and monitor and retain effective control over those operations?

●  Based on the “totality of the circumstances”

The NLRB General Counsel's Position

Joint-employer status exists when, “under the totality of the circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence

over the working conditions of the other entity’s employees such that meaningful bargaining

could not occur in its absence.”

●  Tracking data on sales, inventory and labor costs

●  Calculating labor needs ●  Setting and policing employee work

schedules ●  Tracking wage reviews ●  Tracking time needed for employees to

fill customer orders ●  Retention of right-to-approve

employees ●  Requiring another company and

employees to follow safety rules

WHO IS A JOINT

EMPLOYER?

Examples of “indicia of control” that the General Council has given:

●  Any company that outsources on-site operations to a third party might be deemed a joint employer of the third party’s employees

●  Any company that closely controls off-site operations of a third party, like a franchisor, might be a joint employer ○  Then, unions can effectively use

corporate campaign tactics to organize

WHO IS A JOINT

EMPLOYER?

●  The term “employer” was intended to be construed broadly

●  Employers who use staffing companies and subcontractors are still influencing terms and conditions of employment by influencing price by controlling other variables (“industrial realities”)

●  In this type of situation, employees don’t have a chance to achieve better terms and conditions through collective bargaining

The General Counsel’s Reasoning

Where is this coming from?

●  Spent more than $150 MILLION to re-elect the President

●  Want to organize fast food workers

●  Spent more than $15 MILLION this year on fast food worker protests

Service Employees International Union (SEIU)

Look familiar?

●  Takes a lot of energy to organize local retail outlets unless employees really want a union

●  Far easier to attack large companies with PR campaigns, class action lawsuits, and environmental challenges to their development plans

●  Also look for neutrality agreements

SEIU likes corporate campaigns, not grassroots organizing

They work for independent third parties ●  Subcontractors ●  Franchisees ●  Business partners

But, many employees don’t work for the “Big Guy”

BUT NOT IF THE NLRB REDEFINES THE CONCEPT OF A “JOINT EMPLOYER” UNDER THE NLRA

State in agreements that sub-contractor (or franchisee) makes all employment decisions Stick to what you write! NOTE: There is an exception for franchisors to control product quality and brand

So what’s an employer to do?

Give as much control to the third party as you can accept

●  Embrace your new-found status as a joint employer

●  Talk to your staffing company ●  Draft protections into

agreements ●  Require compliance with laws ●  Insulate yourself against union

organizing risks

If you can’t beat ‘em…

JOIN ‘EM

The combination of the NLRB’s new “Ambush Election Rules” (which went into effect in April) and the new joint employer rules could make 2015 and beyond scary for employers 7-Day position statement requirement Can you gather the information in time?

Elections in as few as 10-21 days Where are your weak spots?

The Perfect Storm?

The NLRB has asked for briefs in Miller & Anderson on whether the NLRB should

What’s on deck?

Continue disallowing inclusion of solely-employed employees

and jointly-employed employees in the same unit without both

employers’ consent (Oakwood Care Center)

-OR- Return to prior case law,

permitting inclusion of solely- and jointly-employed employees

in same unit without consent of employers

(M.B. Sturgis)

Q&A

John Merrell Employment and Labor Law Attorney

Ogletree Deakins

john.merrell@ogletreedeakins.com

HRCI

Program ID: 259345 Recertification Credit Hours Awarded: 1 Specified Credit Hours: HR (General)

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