The NLRB voted 3-2 to expand the definition of joint employment, allowing a union to negotiate with a staffing buyer over both directly hired and staffing firm workers. The board announced the ruling yesterday.

In its decision, the NLRB ruled Browning-Ferris Industries of California was a joint employer of workers employed by Leadpoint Business Services at BFI’s Milpitas, Calif., recycling site. The board cited indirect and direct control that BFI possessed over key terms and employment conditions of the Leadpoint workers.

Staffing industry experts asked this week don’t believe the ruling will have a large impact on most staffing-supplier relationships because relatively few staffing buyers have employees with collective bargaining at their sites, according to a story in the CWS 3.0 newsletter. A recent, informal survey of buyers found 35% had no union membership at their companies and 32% reported less than a tenth of their workforces operate under a collective bargaining agreement. The NLRB’s decision also impacts only the joint employer definition under the National Labor Relations Act, and it can be appealed. However, the decision does signal another administrative expansion of joint employment.

“Although we cannot definitively predict the long-term impact of the decision,” American Staffing Association General Counsel Stephen Dwyer said in a statement today, “prior board decisions that effectively made it easier for temporary workers to unionize did not demonstrably result in increased unionization of such workers, and that largely remains the case today.”

In announcing its decision, the NLRB said it revised the standard to better align the National Labor Relations Act with the current economic landscape and cited 2.87 million people working through temporary agencies in August 2014.

The NLRB said it looked at whether:

1. Both firms are employers within the meaning of the common law.
2. They share or co-determine those matters governing the essential terms and conditions of employment.

“In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the board will — among other factors — consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so,” according to the board’s announcement.

However, the dissenting members of the NLRB, Philip Miscimarra and Harry Johnson, blasted the decision, saying it does away with a 30-year-old definition of the employer-employee relationship and the board exceeded its jurisdiction.

“In this instance, our colleagues have announced a new test of joint-employer status based on policy and economic interests that Congress has expressly prohibited the Board from considering,” the dissenters wrote. “That alone is reason enough why the new test should not stand. Even more troubling from an institutional perspective, however, is the nature of the new test. The negative consequences flowing from the majority’s new test are substantial. It creates uncertainty where certainty is needed.”

The decision also raised concern elsewhere.

This serious implications for all businesses — those that typically work with contractors and subcontractors, those that operate in a franchise environment, and even those that simply hire contingent workers from a staffing agency,” said Rebecca Bernhard, a labor and employment attorney with the law firm Dorsey & Whitney.

“Departing from 30 years of precedent, the board has set a new standard which requires that the two employers (whether franchisor or franchisee, contractor and subcontractor or recipient and provider of temporary employees) simply possess sufficient control over terms and conditions of employment,” Bernhard said. “Before, the two employers had to both exercise control but now can exercise that control ‘indirectly.’ Unfortunately for employers, indirectly is a difficult test to define — and under the case at issue today, was found to be exercised through what have been standard terms in an agreement between a recipient employer and a staffing agency: terms such as the requirement for the staffing agency’s employees to meet standard selection tests.”

Case documents indicate BFI has contracted with Leadpoint since 2009 to supplier workers to the Milpitas site, known as the Newby Island Recyclery. Leadpoint workers sort recyclables, provide housekeeping and serve as screen cleaners. Leadpoint provides its own supervisors on the site and has sole authority to raise wages for its workers — but is contractually prohibited from raising wages more than BFI workers doing similar jobs.

Leadpoint also maintains its own HR operations on the Newby Island site — separate from BFI’s own — and handles hiring and disciplining of its own workers, according to case documents.

The dispute began in 2013, and an NLRB regional director ruled against the union in August 2013, saying Leadpoint Business Services, was the sole employer. Yesterday’s announcement reverses that decision.

The NLRB also announced yesterday that ballots impounded at the Milpitas recycling site on April 25, 2014, be counted and appropriate certification issued.