The NLRB’s New Joint-Employer Test: What You Need to Know Regarding its Likely Impact

Presented by: Derek Barella

Joseph Torres

September 3, 2015

Today’s eLunch Presenters

Derek Barella

Partner Chicago

DBarella@winston.com

+1 (312) 558-8002

Joseph Torres

Partner Chicago

Jtorres@winston.com

+1 (312) 558-7334

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Agenda

• Historical areas of concern • Likely joint employer scenarios • Browning-Ferris – the new test • Browning-Ferris – key facts • Implications of joint employer status • Possible responsive strategies • Concluding thoughts on NLRB’s agenda

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Historical Areas of Concern

• Liability • Exposure to alleged wrongdoing of a third-party

• Not limited to the ULP context

• Organizing • Risk of union organizing a third-party’s employees who work in your facility

• Either as a discrete “jointly-employed” unit or a broader “mixed” unit

• At times, the mixed-unit scenario was barred by the “consent” rule

• Secondary pressure • Generally, primary employer protected

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Joint Employer Status

• Potentially arises in variety of contexts: • User/supplier

• Lessor/lessee

• Contractor/subcontractor

• Franchisor/franchisee

• Parent/subsidiary

• Predecessor/successor

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The Historical Test

• When do two employers “share or codetermine” essential terms and conditions of employment? • Actual control must be shown

• Hypothetical, unexercised control not enough

• TLI, Inc., 271 NLRB 798 (1984) • Contract gives user employer sole and exclusive responsibility for

“maintaining operational control, direction, and supervision over drivers”

• User employer instructs drivers regarding deliveries, files incident reports with supplier, maintains driver logs and records

• Board holds contract language not sufficient absent evidence user employer “affected terms and conditions of employment”

• Board concludes actual supervision/direction was “limited” and “routine”

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The New Test

• No longer limited to actual control • Indirect control can be enough

• E.g., third-party firm raises wages based on contractual increases

• E.g., scheduling of work flow controls third-party scheduling

• Potential control can be enough, depending upon: • Reserved contractual rights, even if unexercised

• Core vs. non-core nature of the work

• Integration of the work

• Economic commercial leverage in the relationship

• Technological oversight

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Key “Control” Facts

• Management structure • Separate supervisors/leads/HR

• Hiring practices • Contractual right to reject

• Meet/exceed BFI’s selection procedures and tests

• Discipline and termination • Right to discontinue use

• Wages and benefits • Cost-plus contract

• Agency wages cannot exceed BFI wages

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Key “Control” Facts

• Scheduling and hours • Control over speed of work streams/productivity standards

• Authentication of hours worked

• Work processes • Assign specific tasks through agency supervisors

• Training and safety • All safety rules applicable

• Limits on duration of employment • Never exercised

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Implications

• Decision not limited to its facts • Joint liability for ULPs and contract violations • Union organizing (but, one more shoe to drop)

• Oakwood Care Ctr. likely to be reversed – amicus briefs requested in July

• Currently, unions can organize jointly-employed employees in a discrete unit

• Joint collective bargaining obligations • Unions can try to bring deeper pockets to the table

• Who bargains about what?

• Information disclosure may disrupt leverage among contracting entities

• Secondary pressure

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Browning-Ferris – What’s Next?

• Any direct appeal to the Circuit Courts will have to wait • Congressional fix unlikely in the near term • Other agencies to follow

• DOL efforts to hold large companies responsible for wage/hour compliance

• EEOC amicus brief in Browning-Ferris in support of expanded test

• OSHA “draft” memorandum indicating interest in pursuing joint employer cases against franchisors and franchisees

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Options to Eliminate/Mitigate Risk

Terminate relationship

Modify relationship

and/or contract

Accept/embrace joint employer

status

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Possible Responsive Strategies

• Review key areas of relationship • Contract provisions

• Physical presence

• Day-to-day interaction

• Create a decision framework relevant to your business

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Framework for Assessment

High-Level Considerations

Employee/ Facility-specific

HR/LR

Business/ Economic

Enterprise HR/LR

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Framework for Assessment

Type of Facility

Unionized Non-Union

No Organizing

Non-Union Prior/Ongoing

Organizing

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Framework for Assessment

Type of Work

Core Non-core Skilled

Unskilled Integrated Non-integrated

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Framework for Assessment

Type of Third-Party

Temp-to-Hire Supplemental

Discrete Provider Demonstrated

Expertise

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Spectrum of Options to Eliminate/Mitigate Risk

Terminate relationship to

avoid risk

Modify relationship and

agreement to mitigate risk

Accept/embrace joint employer

relationship

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Putting It All Together

• New election rules – median time to election is now 23 days • Specialty Healthcare – micro-units • Browning-Ferris • Reversal of Oakwood Care Ctr. • Limits on employer discipline (PCA, inherently concerted)

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Proactive Employer Strategies

• Assess your current program for measuring/addressing employee sentiment

• Identify vulnerabilities to organizing activities • Test your ability to quickly assess and respond to a campaign • Evaluate risks in key areas

• Micro-units

• Joint employer

• Supervisor status

• Employee conduct rules

• Discipline rules and procedures

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Thank you