NLRB Delivers Crushing Blow to Small Businesses

Filed in Labor by on August 28, 2015 2 Comments

In a long-awaited, 3-2 decision, the National Labor Relations Board (NLRB) changed the well-established standard for determining whether two separate and independent companies are joint employers under the National Labor Relations Act. The case is BrowningFerris Industries of California, Inc. d/b/a BFI Newby Island Recyclery.

BFI Newby Island Recyclery owned and operated a recycling facility and it contracted with Leadpoint Business Services to provide workers to help sort materials inside the facility. The relationship between BFI and Leadpoint was governed by a temporary labor services agreement. The issue in the case was whether BFI and Leadpoint were joint employers of the sorters, screen cleaners, and housekeepers that Leadpoint provided to BFI.

As previously reported, for the past 30 years the NLRB has held that whether an otherwise independent company was a joint employer turned on whether the company retained for itself sufficient control of the essential terms and conditions of employment of the employees employed by the other employer.

A key element of that determination was whether the company exerted “direct and immediate control over employment matters of the other entities’ employees.” The board’s focus was on whether the joint employer meaningfully affected matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction.

In finding that BFI was a joint employer, the NLRB applied a new standard that eliminates the requirement that the employer actually exercise the authority to control. Now, the right to control will not be considered in determining joint-employer status.

As a result, direct, indirect (e.g., through an intermediary), and potential control over working conditions are all relevant to the joint-employer inquiry.

Examples include dictating the number of workers to be supplied; controlling scheduling, seniority, and overtime; and assigning work and determining the manner and method of work performance.

The dissenting members of the board criticized the expanded standard, arguing that it abandoned a longstanding test that provided certainty and predictability. They predicted that it would subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity.

NAHB is an executive committee member of the Coalition to Save Local Businesses, which was successful in including appropriations riders in both House and Senate appropriations measures to block the NLRB from investigations on an expanded joint employer standard. Because the appropriations strategy is not a guaranteed success — the President’s signature is necessary on the final bill — NAHB will support soon-to-be introduced bicameral legislation that will protect the NLRB’s traditional joint employer definition.

We ask all members to encourage their Representatives and Senators to support this legislation upon Congress’ return in September.

The case is Browning-Ferris Industries of California Inc., et al v. Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, Case number 32-RC-109684.

View Tom Woods’ press statement on the decision.


Comments (2)

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  1. Help me focus this in on builders, especially smaller builders.

    Does this go beyond the union issues sited here and in other press accounts.

    Beyond unionization is the contractor-subcontractor relationship impacted at a practical level? Job safety? Employee benefits? Hours worked? Contractor liability? Workers compensation? Etc.

    • NAHB Now says:

      These are all good questions. It is important to note that the NLRB’s jurisdiction extends over private sector employers whose activity in interstate commerce exceeds a gross annual volume of business of $500,000 or more. NAHB is still reviewing the decision to determine the practical implications for the home building industry and we expect to have more information in the coming days.

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