The NLRB recently issued a decision that could significantly broaden liability for businesses that employ contract workers. Businesses that once evaded liability may now be on the hook for subcontractors, franchisee employees, and temporary employment agency hires.
It has been common practice for employers to use third-party staffing agencies rather than hiring their own employees. While creating more flexibility for employers, it also left gaps in worker protection related to overtime, benefits, and workers‘ compensation. The National Labor Relations Board (NLRB) issued a decision that could significantly broaden liability for businesses that employ contract workers. Businesses that once evaded liability may now be on the hook for subcontractors, franchisee employees, and temporary employment agency hires.
Joint employers and the temporary workforce
Browning-Ferris Industries of California used a third-party staffing agency, Leadpoint Business Services, Inc., to provide temporary workers to staff its recycling facility. The contract between the two companies stated that the staffing agency was the employer and set forth the assignment of responsibilities, including disciplinary action, wages, and terminations. However, despite these outlined contractual liabilities, Browning-Ferris maintained significant control over how employees were disciplined, what employees were paid, and whether the company had the power of termination.
NLRB establishes new joint employer test
A union petitioned the NLRB to represent both employees and the temporary workers under the theory that the temporary workers were jointly employed. The NLRB ruled in favor of the union, essentially adopting a new version of the joint-employer test. Now, employers need only possess the authority to control working conditions, even if they do not exercise the control, to be considered joint employers. The NLRB also declared that the growing temporary work force required a new test, acknowledging the potential control of multiple businesses over the conditions of contract workers.
What does new test mean for contract workers?
Under the new standard, any company that maintains direct or indirect control over the hiring, firing, discipline, supervision or direction of contract workers, wages, and other working conditions, despite a third-party contract, could be considered a joint employer. This new joint-employer test is likely to expand liability for companies that routinely use temporary or contract workers. The NLRB and the Department of Labor are looking at the issues related to third-party staffing agencies, subcontractors and independent contractors. Any employer that is deemed a joint employer could face liability under OSHA for safety violations as well as liability related to discrimination, harassment, and other employment related issues.
Advocacy for temporary workers and independent contractors in Minnesota
Wanta Thome Jozwiak & Wanta LLP is dedicated to protecting the rights of employees, temporary workers and independent contractors in Minnesota. For more information about your rights, please call 612-252-3570. Our Minneapolis, Minnesota attorneys are prepared to protect your rights related to wages and overtime, harassment and discrimination, and other employment-related legal claims.
(Please note: An update to this post was made on December 15, 2017, and can be found here: https://www.baillonthome.com/blog/nlrb-roles-back-contract-worker-protections.)