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Latest News - August 2015

August 29, 2015
Labor board ruling will create major confusion in disputes: Critics

The National Labor Relations Board, in its ruling on a major employment case Thursday, said a business can be found liable for the labor violations of another employer even if it had only "potential" control over the second employer's workers.

Critics, including the board's dissenting members, said the new standard set by the main federal labor law enforcement agency in the Browning-Ferris decision would create major confusion in resolving labor disputes.

"No bargaining table is big enough to seat all of the entities that will be potential joint employers under the majority's new standards. In this regard, we believe the majority's new test impermissibly exceeds our statutory authority," said dissenting board members Harry Johnson and Philip Miscimarra.

Previously, the board had said that for a company to be a joint employer — that is, when workers must answer to two separate bosses — it had to have some form of involvement in the management of them. But in its ruling Thursday, a three-member majority said that standard was outdated due to the proliferation of temporary staffing agencies and the expanding use of temporary contracting.

"We will no longer require that a joint employer not only possess the authority to control employees' terms and conditions of employment, but also exercise that authority. Reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry," the majority said.

The expanded standard was designed to make it easier for unions to organize workers by giving them a second company to target if they cannot organize the workers through the company that directly employs them. The board's general counsel, Richard Griffin, argued in the case that the old standard had been changed because it, "undermine[d] the fundamental policy of the (National Labor Relations) Act to encourage stable and meaningful collective bargaining" by making organizing unions too hard.

The Browning-Ferris case involved a California recycling company by that name that subcontracted some of its work at a facility in Milpitas, Calif., to Leadpoint, an Arizona-based company. The majority cited the fact that some Leadpoint workers had been fired after some Browning-Ferris officials observed them drinking on the job and vandalizing property and reported them to Leadpoint. Browning-Ferris also set production quotas and the hours worked, among other requirements. These actions showed it was exercising control, the majority said.

The standard that decision creates is exceptionally broad, argued James Sherk, labor policy analyst at the conservative Heritage Foundation. "Virtually all customers specify productivity or quality goals, or hours they will be open to have a contractor on the site. This creates some 'indirect' control over working conditions — which the NLRB now wants to define as joint employment. BFI had a standard labor services contract with Leadpoint. If they are a joint employer then almost every such contract is," he said.

Collective bargaining under the new rule will be anything but stable, warned Steve Bernstein, a labor lawyer with the management-side firm Fisher and Phillips. It will allow unions to target deep-pocketed companies, arguing they are joint employers even if they have little do with company that is the workers' primary employer.

"The unions are licking their chops, so to speak, at the prospect of getting at [financial] resources that the primary employer may not bring [to the table]," Bernstein said.

It also will throw together two companies that don't necessarily have any other connection and therefore little common ground or reason work together. That will create confusion in negotiating contracts, he argued.

The dissenting NLRB members noted that the majority relied heavily on the argument that it was merely returning to an older, pre-1980s standard that the board had used to determine "joint employer" status, not inventing a new position. The majority cited several cases in that regard. The dissenters countered that many cases didn't say what the majority claimed.

"The majority fails to mention that in many of the cited cases there was evidence that the contractual rights were exercised, and there was other evidence of direct control over employees' work. The majority's statement also fails to account for all the board cases that reach the contrary result with similar contractual provisions," Johnson and Miscimarra said.



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