In a highly anticipated decision, the NLRB today departed from three decades of an accepted standard for joint employment status and issued a new test that makes it far more likely that, even if a company does not directly employ an individual, it may be liable for employment torts and other encumbrances.
In this particular action, Browning-Ferris Industries of California, Inc., utilized the services of numerous employees by way of an outside staffing firm. This is a common practice, as almost 3 million workers were temporarily placed with American companies in 2014. Prior to today, a company utilizing such services was only considered a joint-employer only if it had “direct control” over working conditions.
Under the new standard, which the board said was necessary due to generational and technological changes in the workplace, a company is a joint employer if it exercises “indirect control over working conditions or if it reserves the authority to do so.” This implicates two huge groups: companies who utilize staffing services and franchisers.
The practical import of the decision is that these companies, who previously enjoyed immunity from discrimination and harassment suits, workers compensation, and other benefits obligations, will have to completely revamp the treatment of such employees. This will require things like handbook revisions, harassment training for outsourced employees, and an understanding that outsourced workers, who often come and go quickly, most likely will have to treated as in-house employees.
With the currently constituted Board in place for at least two more years, keep a look out for upcoming decisions that explain more specifically what does and does not consitute “indirect control over working conditions.” We will certainly do so.
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