August 28, 2015

The NLRB's Browning-Ferris Industries Decision: The Implications for Nonprofits as "Joint Employers"

3 min

The National Labor Relations Board's decision on August 27, 2015 in a case involving workers hired by one firm but working at Browning-Ferris Industries of California (BFI), highlights that, notwithstanding apparent and intended separateness, two separate legal entities may be found to be joint employers of certain employees if the entities "share or co-determine" matters governing the essential terms and conditions of employment for the employees.

The BFI case does not mean that nonprofits will automatically be found to be joint employers with other entities with whom they are affiliated, including national or international organizations, or subsidiaries or affiliates, with which they might have a federated, chapter, parent-subsidiary, or similar relationship (or with temporary or staffing agencies that supply staff for the nonprofit). But the decision highlights that seemingly innocuous facts, including steps taken to comply with other federal or state laws, could be viewed by the National Labor Relations Board as evidence of co-determination.

The case involved workers at BFI's Newby Island recycling facility. BFI employed approximately 60 workers at the facility. The BFI employees worked outside the facility, preparing items for sorting within it. BFI's employees were represented by Teamsters Local 350. BFI had contracted with Leadpoint Business Services to provide workers inside the building to further sort items for recycling. Local 350 petitioned to represent the workers, arguing that Leadpoint and BFI jointly employed the workers. A Board regional director determined that the workers were not jointly employed and found that the workers were employed only by Leadpoint.

The Board reversed the decision of the regional director. In so doing, it observed: "Where the user firm owns and controls the premises, dictates the essential nature of the job, and imposes the broad, operational contours of the work, and the supplier firm, pursuant to the user's guidance, makes specific personnel decisions and administers job performance on a day-to-day basis, employees' working conditions are a byproduct of two layers of control."

According to the Board, failing to recognize that "control" may deprive workers of their right to bargain effectively over working conditions, because those conditions are imposed by more than one employer, rather than one.

The decision also has potential implications well beyond the context of organized labor, because employee rights under the National Labor Relations Act are not limited to those who are members of or represented by a union. Most importantly, the rationale of the decision highlights the need for nonprofits to assess and understand the nature of their relationships with temporary or staffing agencies, as well with parent, subsidiary, chapter, and other affiliated organizations, in light of the potential to be found to be a "joint employer."

The Board's decision in the Browning case shows that it will pierce corporate formalities in favor of a fact-intensive inquiry to determine whether two ostensibly separate employers are, in fact, joint employers. In determining whether joint employment exists, the Board will analyze whether there is a common-law employment relationship and, if so, whether the employer possesses sufficient control over the employees' essential terms and conditions to permit meaningful collective bargaining with representatives of the employees.

The Board's decision revealed just how broadly it will interpret such facts to find that a joint employer relationship existed. In BFI, for example, the Board found that although BFI did not participate in day-to-day hiring, it "co-determined" the outcome of that process with Leadpoint by requiring Leadpoint's employees to satisfy certain requirements, such as being competent, successfully passing drug tests, and not being ineligible as a result of prior employment by BFI. Similarly, the Board relied on the fact that BFI, in compliance with OSHA obligations, compelled Leadpoint's employees to comply with BFI's site safety policies.