A National Labor Relations Board (NLRB) decision in August 2015 fundamentally alters relations between the various independent entities that provide services in the health care industry. In a 3-2 decision, NLRB overruled its own precedent and held that “indirect control” was the primary factor in determining whether a joint employer relationship exists under the National Labor Relations Act.
The decision, in the Browning-Ferris Industries of California case, drastically expands the circumstances in which a company relying on contractors or staffing agencies to supplement its own workforce can now be potentially liable as a “joint employer” of those employees for new joint bargaining obligations and for breaches of collective bargaining agreements. What will the Browning-Ferris decision mean for health care employers in practice?
Prior Joint Employer Standard
The National Labor Relations Act imposes obligations on employers, including the duty to bargain with a union that workers select to be their representative. Again, a company that does not directly employ workers can be held liable for these obligations if it is held to be a “joint employer.”
Prior to the Browning-Ferris decision, NLRB defined who was a “joint employer” based on a test set forth in NLRB v. Browning-Ferris of California, a 1982 Third Circuit Court of Appeals case, and in two subsequent NLRB decisions.
Under this decades-old test, entities were found to be “joint employers” when each entity exerted direct and significant control over the same employees that they shared or co-determined matters governing the same terms and conditions of employment. Such factors included the right to hire, fire, discipline, and supervise the employees. Any such control had to be direct and immediate, not theoretical, limited, or routine.
New Decision Expands Standard
The question before NLRB in the lates tcase was whether Browning-Ferris, a recycling company, was a “joint employer” of Leadpoint, a staffing services company that provided Browning-Ferris with housekeepers, among other workers, in the context of a unionrepresentation election covering the Leadpoint workers at a specific facility.
Browning-Ferris had entered into a temporary labor services agreement with Leadpoint in which Leadpoint supplied Browning-Ferris with these workers. Under the agreement between Leadpoint and Browning-Ferris:
- Leadpoint had the sole authority to counsel, discipline, and terminate its employees;
- Browning-Ferris could reject any Leadpoint employee and could discontinue the use of any Leadpoint employee for any reason;
- Leadpoint was responsible for paying the employees but could not, without Browning-Ferris’ approval, pay them a higher wage than Browning-Ferris’ own employees for doing the same tasks;
- Leadpoint decided which employees to schedule for which shifts, but Browning-Ferris retained control over the shifts and operating hours of the facility; and
- Browning-Ferris set productivity standards, and Leadpoint employees were required to comply with Browning-Ferris’ safety policies and procedures.
NLRB held that Browning-Ferris was a “joint employer” of the Leadpoint employees as it exerted “significant control” over hiring, firing, and disciplining them by virtue of the agreement with Leadpoint. Moreover, because Browning-Ferris exercised unilateral control over the recycling facility, it controlled the supervision, direction, and work hours of the workers.
New ‘Joint Employer’ Test
Under the new test, NLRB will find that a party is a “joint employer” if it:
- Is an employer within the meaning of the common law; and
- Shares or co-determines matters governing essential terms and conditions of employment.
NLRB will consider the authority each party exerts with respect to hiring, firing, discipline, supervision, wage and hours, overtime, scheduling, assigning work, and determining the method of work performance when determining whether a party is a joint employer.
What is crucially different from the prior test is that a company using a staffing company’s employees can be found to be a joint employer if there is evidence of indirect control by the company. Prior to this, to be found a joint employer, a company would have to be found to have exercised direct and immediate control of the staffing agency’s workers.
In particular, NLRB held that “[w]here…[a] 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.”
What It Means For Providers
Let’s say that a health care provider has a contract with a housekeeping agency to clean its facility. If it retains the right to exclude undesirable housekeepers from its facility, will that make it a “joint employer” of those workers?
What if a health care provider contracts with an outside staffing agency for nurse assistants but retains the right to discipline them and trains them to follow the facility’s safety protocols?
Is it now a “joint employer” of those nurse assistants with the staffing agency?
The answers are not clear. Each case will need examination by NLRB on a fact-by-fact basis. However, a health care provider can best avoid being labeled a joint employer by doing the following:
- Do not place parameters on wage rates of the contracted workers;
- Do not get involved in hiring and firing contracted workers; while this might be difficult, leave all such decisions to the contractor’s management;
- Do provide the contracted workers with general directives to meet a goal, but do not give them specific details as to how to achieve the goal; and
- Do not get involved in conditions of employment; for example, do not dictate when the contracted workers can take breaks or what shifts to work.
This list is not exhaustive, and taking such actions will by no means guarantee that the provider will not be found to be a “joint employer” by NLRB. In light of the profound impact that the Browning-Ferris decision will have on employment relations, a health care provider should consult with legal counsel to evaluate its strategy.
Andrew I. Bart is a New York City lawyer specializing in commercial litigation and labor and employment law. He may be reached at firstname.lastname@example.org or (917) 572-7828.