NLRB ruling to put hefty burden on businesses, subcontractors

The National Labor Relations Board has “refined” its standard for determining joint-employer status in a case that businesses warn could put subcontactors and franchisees out of the business.

A 3-to-2 decision issued Thursday, held that Browning Ferris Industries of California Inc. was a joint employer with Leadpoint, a company that supplied employees to BFI to perform various work functions, such as the cleaning and sorting of recycled products. The International Brotherhood of Teamsters union had filed a petition against BFI, arguing that the two firms were joint employers.

“In finding that BFI was a joint employer with Leadpoint, the board relied on indirect and direct control that BFI possessed over essential terms and conditions of employment of the employees supplied by Leadpoint as well as BFI's reserved authority to control such terms and conditions,” said the NLRB in a statement announcing its decision.

“With more than 2.87 million of the nation's workers employed through temporary agencies in August 2014, the board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances,” said the statement.

“If this decision stands, the economic rationale for hiring a subcontractor vanishes,” Beth Milito, senior legal counsel for the National Federation of Independent Business, said in a statement. “It will make it much harder for self-employed subcontractors to get jobs and of course it will drive up operating expenses for the companies that hire them.”

“The NLRB decided that, for instance, a company which contracts with a business to clean its offices‎, maintain its buildings, secure its facilities, is the joint employer of the contractor's employees, which must negotiate with a union selected by the contractor's employees as their exclusive representative,” Harriet Lipkin, a partner in the Washington office of DLA Piper, said in an email. “The company, which entered the contract to avoid addressing non-core competencies, may find itself more distracted, with greater expense, than if it had simply cleaned, maintained and secured its facilities.