In a long-awaited decision, a split National Labor Relations Board has adopted a new test to determine joint-employer status, expanding the possibility that an employer utilizing staffing or temporary workforce agencies may be considered a joint-employer.  In Browning-Ferris Industries of California, Inc., the NLRB determined that both the recycling facility and the staffing agency providing labor to the facility were employers under the new, employee-friendly test.

The NLRB’s decision held that a joint-employer relationship may be found if two or more entities “are both employers within the meaning of common law, and if they share or codetermine those matters governing the essential terms and conditions of employment,” such as wages, hours, work assignments, and control over the number of workers and scheduling.  The Board further found that a joint employer is not required to exercise its authority to control terms and conditions of employment, and recognized that control may be “reserved, direct and indirect.”

Here, the relationship between the staffing agency and the facility was controlled by a temporary labor services agreement, which specifically indicated that the staffing agency was the sole employer of the laborers, and that the agreement did not create an employment relationship between the laborers and the facility.  The agreement set forth required qualifications for the laborers and a wage rate schedule, including a provision which indicated the laborers could not be paid a higher rate than that of a similar facility employee without approval.  The agreement further provided the facility with the authority to discontinue use of any laborer at any time.  The facility determined the schedule of working hours, overtime, and break times, as well as the number of laborers needed and productivity standards.  Facility managers and supervisors communicated with staffing agency supervisors regarding the positions to be occupied, daily operating plans, and concerns regarding productivity and job performance and at times addressed these concerns directly to the laborers.

The laborers were to comply with the facility’s safety policies, procedures and training requirements, and received occasional training and education from facility managers.  Additionally, staffing agency laborers were only to be assigned to the facility for six months, but that provision of the agreement was never invoked.  Further, although the agreement provided the facility the ability to review the staffing agency’s records regarding the laborers, the facility had never asked to inspect personnel files.  The agreement further provided sole responsibility for disciplinary action to the staffing authority, although the agency was prompted to take such action in two instances after being notified by the facility of misconduct.

Based upon a careful review of the facts in light of the new standard, the NLRB found the recycling facility to be a joint-employer of the temporary staffing agency employees.  Specifically, the majority found that the facility had significant control over employment-related decisions such as hiring, firing and discipline as well as employee wages and wage increases as detailed by the agreement.  The majority further found that the facility exercised direct and indirect control over operational decisions and productivity standards.  Additionally, the facility exercised “near-constant oversight of employees’ work performance,” at times directly communicating with the laborers and using staffing agency supervisors to communicate directives in other circumstances.

The NLRB justified its new standard by noting changes in today’s workplace arrangements and pointed towards these changes as “reason enough” to adopt a new joint employer test.  This new standard is employee-friendly, and may expose employers to potential liability as joint employers under the NLRA.  Employers should carefully review this decision for its potential impact on any arrangements they may have with temporary staffing agencies and other contractual arrangements which provide workforce assistance.