Presented by the Employment Law Practice Group

Legal Updates for Employment Law

October 9, 2015

G. Jay Habas

NLRB Decision on "Joint Employer" Status of Firm and its Staffing Agency May Leave Employers Vulnerable to Liabilities

By G. Jay Habas, Erie, Pennsylvania

Many employers use staffing agencies to fill their needs for temporary workers. The advantages to the employer include that it can meet fluctuating employee needs without having to hire workers on its own; the temporary agency does the job of recruiting, selecting, training and, in most cases, paying the temporary worker; and the temporary agency could be viewed as the actual employer of the temporary workers, thus insulating the employer from liability under various employment laws.

On August 27, 2015, the National Labor Relations Board issued a decision that changed the standard for determining whether an employer could be a “joint employer” with its temporary staffing agency. “Joint employer” status involves shared responsibility and liability for temporary workers, including the payment of wages and compliance with labor and employment laws. In Browning-Ferris Industries of California, the NLRB held that that the company was a “joint employer” of the staffing agency that it used to staff its operations. In so doing, the NLRB altered the standard for determining a “joint employer,” going from the long held rule that emphasized whether there was “actual control over the terms and conditions of employment,” to a new test of whether the separate entities “share or codetermine those matters governing the essential terms and conditions of employment.” Under this revised standard, an employer could be found to be a joint employer by merely possessing the power or right to control any term or condition of employment, whether or not it actually did so.

Important factors that persuaded the NLRB in the Browning-Ferris case were that the company used its authority to direct the staffing agency to discipline workers, had the power to veto the workers’ wages that exceeded what it paid its own employees, and set the workers’ shift length and break times.

The Browning-Ferris case is the latest indication of an expansion of the “joint employer” status that can subject employers to liability in situations that they did not intend. In addition to the NLRB, the Department of Labor has aggressively pursued joint employer liability under the provisions of the Fair Labor Standards Act so as to hold employers liable for overtime compensation for temporary staffing workers. State workers’ compensation decisions have also suggested a shift in the principles involving separate employer-agency liability. While federal and state courts are not bound by the NLRB’s findings, the NLRB’s recent decisions on private employment issues such as social media policies and disciplinary actions for employee use of social media have garnered widespread attention. As such, the NLRB’s ruling in Browning-Ferris may influence the courts, if not employer practices to avoid such exposures.

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